Another mass shooting leads to big gains for gun manufacturers
Gun stocks rose Monday following one of the deadliest mass shootings in American history late Sunday night.
Suspected gunman Stephen Paddock, age 64, of Mesquite, Nevada, opened fire late Sunday night at an outdoor concert across from the Mandalay Bay hotel on the Las Vegas Strip. Current reports confirm at least 58 people were killed, with more than 500 injured.
This morning as trading opened, shares of Sturm Ruger (RGR) were up 6%, while American Outdoor Brands (AOBC), the company formerly known as Smith & Wesson, gained nearly 7%.
Gun stocks usually rally after mass shootings due to the public conversations and news discussions about potential gun-control legislation. This increases speculation that people will want to buy guns before any regulations could be implemented.
The Las Vegas shooting will be the first test of how President Trump will respond to the issue, which will effect the financial outlook for gun manufacturers. After shootings at the Pulse nightclub in Orlando, the Aurora, Colorado movie theater, and Sandy Hook Elementary School, investors feared that then President Obama would demand tougher gun control laws.
That fear led to constant growth in gun sales during the Obama administration’s two terms. This year, shares of Sturm Ruger and American Outdoor Brands have both declined since Donald Trump was elected. Even FBI background checks for new firearm purchases started declining once Trump took office in January of 2017.
Sturm Ruger said earlier this summer that its latest quarterly revenues were down 22% from a year ago with a 50% drop in earnings. American Outdoor Brands reported a nearly 40% decrease in sales during its latest quarter as well.
Although a change in federal gun control seems unlikely, states which experience mass shootings such as this tend to pass their own individual gun control legislation. In 2013, GOP Gov. Brian Sandoval vetoed a legislatively approved bill that would have required universal background checks for firearm purchases in Nevada.