How The GOP Sweep Is Bad News For Some Gun Manufacturers

Long term, it’s absolutely great to have a president who will support Americans’ Second Amendment rights. But short term, it’s bad news for some gun manufacturers who have experienced a boom while liberals have repeatedly tried to ban guns.

One such company is Smith & Wesson, which has taken the extraordinary move of changing its iconic name to the banal and vanilla “American Outdoor Brands.” S&W’s stock has absolutely tanked since the election.

Smith & Wesson has lost about 20 percent of its market value since the Republican won the election. As the threat of gun-control measures subsides, there’s less of a need for stockpiling.

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In the last year, S&W has diversified into other areas besides firearms, acquiring knife manufacturer Taylor Brands and camping equipment maker Ultimate Survival Technologies. This was in preparation for the long winter of a Democratic White House led by Hillary Clinton. They were preparing to have their main product line defenestrated.

Now all of that has changed. The NRA was one of Trump’s first and most ardent endorsers.

But calm among the NRA crowd is a problem for firearm makers, who profit¬†significantly¬†from surges in weapon stockpiling that take place every time a politician tries to address gun control. Without that kind of fear-driven buying, it’s unclear what gunmakers’ growth profile will look like because, quite frankly, the people who tend to buy guns probably already have enough of them.

Some gun manufacturers like Daniel Defense, are likely happier than S&W–er, American Outdoor Brands. The smaller, boutique manufacturers no longer have an existential threat hanging over their heads. But Christmas gun sales may still fall below expectations. People who have guns may want to get something else this year. The urgency is gone.

Sometimes good news isn’t always good in the short term, especially if you own stock in S&W.