United States firearms manufacturers earned $152 million on the stock market on Thursday, after the United States Supreme Court threw out a New York law restricting the carrying of firearms on the streets.
The US constitutional court ruled by a six-to-three vote that US citizens have the right to bear arms for self-defense outside the home. The repealed New York law required people to show a particular need for a license to carry a gun in public.
Smith & Wesson shares, whose revolver is the most iconic on the market, led the gains, rising 9.62% on the New York Stock Exchange during the day, closing each share at $14.36. In market capitalization, it added 57 million dollars.
For its part, the titles of the manufacturer of rifles Sturm Ruger & Company grew 4.30%, to 64.31 dollars per share, while the papers of the ammunition manufacturer Vista Outdoor grew 2.91%, to 30.01 dollars each.
For Smith & Wesson and Sturm Ruger & Company, Thursday’s gains are the biggest intraday gains in two years; For Vista Outdoor, there has been no growth on a day like today since August 2021.
Jacobo Rodríguez, director of Economic Analysis at Black Wallstreet Capital, commented that the gains on the stock market are due to the expectation that arms manufacturers will increase their sales in the medium-long term.
“It is a matter of perceptions, because if a restriction on the purchase, sale, use or carrying of firearms is removed, that gives the idea that people are going to buy more,” he said.
Alain Jaimes, Economic and Stock Market analyst at Signum Research, said that the Court’s decision “helps the growth perspective of firearms manufacturing companies”, since it relaxes the restrictions on the carrying of weapons, which “has a positive effect on the growth rate of the products they offer”.
Similar laws in states like California, Hawaii, Maryland, Massachusetts, New Jersey and Rhode Island are expected to be reversed as a result of the constitutional court’s ruling.
The Signum analyst commented that when laws are passed or measures are imposed that restrict their use, gunsmiths also win, since the perception is created that in the short term more weapons are going to be acquired, due to the fear of consumers that there will be a shortage in the future.
Despite today’s earnings, the three companies accumulate a loss in market value of 1,214 million dollars so far in 2022.
The bulk of these losses is explained by the collapse of Vista Outdoor, which has erased 944 million dollars in capitalization for a market value of 1,696 million dollars.
Smith & Wesson has lost 206 million dollars, for a total capitalization of 654 million dollars.
While in the case of Sturm Roger & Company, although it is the one that has lost the least, in the year it has seen how 64 million dollars have disappeared in its stock market value, for a total capitalization of 1,133 million dollars.
Inflation hits them
Jacobo Rodríguez commented that during the year, the firearms sector has been affected, because in an environment of high inflation and a slowdown in the US economy, “people stop buying goods that are not essential (such as weapons), and they prioritize basic consumption”, which has hit the income of the gunsmiths.
In the year, the titles of Vista Outdoor are the ones that lose the most, with a decline of 3.27%; Smith & Wesson shares are down 18.91%, while Sturm Ruger & Company is the most resilient, down just 3.27%.
Alain Jaimes explained that beyond the fact that there is a particular factor that explains the decline in the sector, the fall of the gunsmiths on the Stock Exchange is due to the “strong corrections” of the stock markets worldwide, due to the effect of monetary policy restrictive in the United States.
Despite efforts to pass restrictive legislation, analysts ruled out that this will have an impact on gunsmiths later in the year.
“Unfortunately, the arms market is a resilient market with great political influence, in that sense, despite the fact that there are new laws to restrict their use and sale, I see it unlikely that very aggressive laws will be passed that distort this market,” he said. Jaimes.
The United States is the country with the largest possession of weapons in the world, with 393 million in the hands of the civilian population, for a rate of 120.50 weapons per 100 inhabitants, according to data from the Small Arms Survey 2018, carried out by the University of Geneva, Switzerland.
In Mexico, for its part, there are 16.8 million weapons owned by civilians, for a rate of 12.80 per 100 inhabitants.
Court decides to protect the use of weapons (Geopolitics)