It isn't like there wasn't promise behind the hype, here is where he was back in mid 2015 when he signed his NHL contract: June 2015- The Red Wings have signed their 2014 seventh round selection, Axel Holmstrom, to a three-year entry-level deal. He’s done nothing but improve his stock ever since being selected 196th overall. From leading to Sweden at the World Juniors, Breaking a record set by the Sedin Twin’s for playoff scoring and being named the Swedish Junior Hockey Player of the Year to cap it off.
More context: Holmstrom (no relation to longtime Red Wing Tomas Holmstrom) is one of the Red Wings' top European prospects. His stock soared after he was drafted in the seventh round (196th overall) in 2014. He compiled 18 points (seven goals, 11 assists) in 15 games during the 2015 Swedish League playoffs, breaking the record for points in the postseason by a junior player that was shared by Daniel and Henrik Sedin. He has twice represented Sweden in the World Juniors (13 points in 14 games).
In December of 2015 he was tied for the top scorer for junior aged players in the SHL.
I'm not sure why people wouldn't be excited about a seventh round pick doing that?
Unfortunately then his multiple knee injuries (including a full ACL tear on his previously injured knee) and concussion messed up his upward trajectory. Especially the knee injuries, since his skating was the reason he most likely flew under the draft radar. He was never able to regain his pace in Sweden or the AHL.
But the hype around him was real, he was putting up real results right after he was drafted. And I think most of his hype was because he was still projected as a third line center anyways, which would be great for a seventh round pick.