William Blair attributes ShotSpotter weakness to Chicago mayoral election

William Blair analyst Matthew Pfau notes that ShotSpotter shares are down 20%, which the firm sees being due to Brandon Johnson being elected as Chicago’s mayor given that Johnson has previously commented that he wants to discontinues the city’s use of the company’s service. Chicago accounted for 10% of ShotSpotter revenue in 2022 and the firm’s understanding is that the current contract with the city runs through February 2024. The firm’s check with people associated with the Chicago Police Department lead it to believe that the CPD "thinks highly of the ShotSpotter solution" and while the firm thinks it is possible Chicago could shut off the system after the contract expires in 2024, William Blair also believes "there is a good possibility that the system would be subsequently turned back on," pointing to past instances of cities having shut down their ShotSpotter systems only to turn them back on at a later point. The firm, which views the weakness as "a good buying opportunity," maintains an Outperform rating on ShotSpotter shares.