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article imagePoor fourth-quarter earning keep gun stocks down

By Karen Graham     Mar 2, 2018 in Business
After a mass shooting in the U.S., there is always a call for more gun control, resulting in the NRA seeing a surge in membership, along with increased gun sales. But gun manufacturers are now posting losses as gun stocks plunge. Something has changed.
American Outdoor Brands posted really lousy earnings Thursday after the gunmaker said its sales fell 32.6 percent year over year in its fiscal third quarter of 2017.
The company, which is famous for its Smith & Wesson brand, reported the decline in quarterly net sales resulted in their profits sinking 65 percent. And as of Thursday, shares plunged 18 percent in after-hours trading, and are down 26 percent year-to-date. They also reported they had eliminated 200 jobs the last quarter.
American Outdoor Brands sells a variety of weapons, including the popular Smith & Wesson line of handguns and military-style semiautomatic rifles. These AR-15-style rifles are referred to as assault rifles by gun control advocates, but the industry calls them modern sporting rifles.
Bump stock devices  which attach to semi-automatic rifles to increase the firing speed  are at the c...
Bump stock devices, which attach to semi-automatic rifles to increase the firing speed, are at the center of a debate over what steps should be taken to reduce mass shootings in the United States
On the earnings call, CEO James Debney addressed the Parkland shooting, saying, "We share the nation's grief over this incomprehensible and senseless loss of life and we share the desire to make our community safer. Through our membership and work with National Shooting Sports Foundation, we will continue to support the development of effective solutions that accomplish that objective, while protecting the rights of the law-abiding firearm owner."
Gun makers have been struggling for some time
Interestingly, the Financial Post writes that market dynamics usually play a role in seeing a rise in gun sales after a mass shooting event. When there are calls from victims, gun control advocates and some politicians for restrictions on firearms ownership, investors usually anticipate an increase in gun sales, and stock prices go up.
However, a "pro-gun control" atmosphere has gripped the country right when the "fear trade" in gun stocks should be running in high gear, but it's not doing that, this time. Since February 14, American Outdoor shares dropped 15 percent, while shares of Sturm Ruger dropped by 13 percent.
A memorial for the 32 shooting victims in front of Norris Hall on the Virginia Tech campus in 2007 -...
A memorial for the 32 shooting victims in front of Norris Hall on the Virginia Tech campus in 2007 -- the debate over guns on campus comes in the wake of several deadly campus shootings in recent years
Tim Sloan, AFP/File
Compare today's figures to the Newtown shooting in 2012. Ruger stock rose over 25 percent in two months. And look at the Pulse nightclub shooting event in Orlando, Fla. in 2017. RGR stock rose the following Monday by almost 10 percent.
Sturm, Ruger & Company has previously attributed tough comparisons to a sales spike during the political campaigns for the 2016 election as causing the drop in gun stocks. Democratic presidential candidate Hillary Clinton was campaigning on tighter gun controls, and this led to a spike in gun sales.
Vista Outdoor, which sells the Savage Arms line of rifles, Estate Cartridge line of shotshells, M-Pro7 Gun Cleaning System, Gunslick Pro line of gun care products, and Force on Force training ammunition, also reported dismal earnings earlier this year.
Remington, the maker of the Bushmaster rifle used in the 2012 Sandy Hook shooting in Newtown, Connecticut, recently said it’s preparing to file for Chapter 11 bankruptcy.
More about Stock market, gun manufacturers, fourthquarter earnings, fear trade, Shootings
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