Why are gun stocks tumbling?

It's unclear what's triggering the recent plunge in shares of Smith & Wesson and Sturm Ruger. We may be seeing a correction after a runup around the presidential election.

By Kim Peterson Dec 11, 2012 9:48AM
Credit: Seth Perlman/AP
Caption: Steve Swartz, owner of Capitol City Arms Supply, shows off some of the rifles for sale in Springfield, Ill.,Updated 5 p.m. ET

Gun stocks are seeing the post-election blues.

Shares of Smith & Wesson (SWHC) and Sturm Ruger & Co. (RGR) recovered slightly Tuesday from some pretty steep declines over the last week. Smith & Wesson's stock price finally turned up by 4% Tuesday after sliding 13% over two trading days. Sturm Ruger rose less than 1% after suffering a 17% drop in the last week.

It looks like these stocks are correcting to levels seen before the November presidential elections. Investors jumped into these stocks as the election approached, figuring they would rise as shoppers stampeded into gun stores. And that did happen: Gun dealers made a record number of background-check requests on Black Friday, with 154,873 requests going to the FBI's call centers.

No one totals the actual number of guns sold, but those background-check requests are a good sign that firearms were flying out the doors.

But as the Motley Fool's Sean Williams points out, gun orders tend to return to normal levels after the elections are over, and "investors realize that they've bid shares up far beyond the gun makers' potential."

Some gun buyers are fearing a crackdown on firearms by President Obama, who suggested in one of the presidential debates that he was in favor of reintroducing an assault weapons ban. The National Rifle Association is fanning those fears, featuring a commentary on its site from CEO Wayne LaPierre saying that "an anti-gun Supreme Court, a U.N. Arms Trade Treaty, and a sweeping gun ban aren't just a possibility in a second Obama term. They're a near certainty."

Investors were speculating all day Monday about why gun stocks were down. "Ironically, the gun plays are quickly turning into falling knives," wrote one trader on Twitter. Another said that Sturm Ruger is "doing what it always does, runs like crazy then corrects very hard -- good poster child for why chasing is stupid." Still others said the correction was overblown, and that gun stocks would recover soon.

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144Comments
Dec 11, 2012 12:30PM
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I guess foxy your a yuppie of what ever the latest new word is. Now if you knew as much as you think you know you would understand what a RED NECK is. I am a RED NECK and I do make over 130 k a year, I work for a living.

How much do you make, or does it depend how long you spend on your back or knees.

As far as fanning the flames, the news media fans the flames better than any one.

I'll hold on to my guns and Bible and the constitution of the United States of America, thank you very much

Semper Fi

Dec 11, 2012 1:05PM
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Any of you liberal bastards that think gun control is the way to go need to take a hard look at your "right" to freedom.  Without guns to back our rights, you have no rights and you will not be free. I don't own an assault  rifle, but if this country is ever invaded by forces outside or inside our borders it is the gun to have. The best offence is a good defence. If you can't defend yourself, you are easy prey.
Dec 11, 2012 1:20PM
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FOxymoron AZ said;

"I can tell you why gun sales are down.The rednecks are out of money.Maybe the 1st of the

month it will improve.They`ve spent their welfare money at Nascar."


You are a total idiot.

1. Gun Stocks are down, but sales are NOT. We rednecks have money, on account of the fact that 

     we're not afraid to actually work for a living, and we are still buying guns! hehe

2. NASCAR's season ended a month ago. Nobody's spending any money on that until Feb. hehe

3. Guns aren't cheap, and they aren't handing them out as entitlements. Thus, you don't have any.....

4. Gun Stock is down! You should sell your Dow Corning Silicone Stock, and buy Stock in Guns!!

Dec 11, 2012 1:17PM
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Foxy? most women who go by that moniker aren't. I am not a redneck, but I am a Veteran of 20years. I read the Bible, but not all the time by that I mean not every day. I have often wondered why you left wing idiots need to complain about peaceful citizens like myself owning guns. If you really wanted to accomplish something, you might want to push for cleaning out the inner cities, which is where most gun crimes happen. Most of these crimes are commited by people who do not own guns legally, but I don't belive that would stop the murders. No guns, OK, they will just kill & injure people with a knife, pipes, or chains. Stop the illegal crimes with guns by making a mandatory 10 or twenty five year prison term. Oh, I forgot if that happened you would be whining about the system being racist.
Dec 11, 2012 1:30PM
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I am a redneck by birth and by choice. My income bracket puts me in the top 1% you hear so much about lately. I work 60 hours a week and pay the maximum tax allowed. I also enjoy the privilege that comes from being successful and i buy any gun i want anytime i want. The first of the month referred to by the idiot is for the non working , m****ducing, unmarried hyprocits who will come banging on your door when the **** hits the fan because they can not feed there family and the governemnt has cut them off. This country was started by a bunch of white men with guns...get used to it or leave.
Dec 11, 2012 12:15PM
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Down to pre-election levels is still high for these stocks.  Obama can push them back up very easily by talking gun control.  The media is also very good at selling guns when they talk about gun control as the did surrounding the Zimmerman case.
Dec 11, 2012 1:44PM
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Nuts on either extreme side hate facts. Pick any area that has lax gun laws and allows lawful citizens to arm themselves and you will see a much smaller crime rate. Criminals hate it when you shoot back. Car jackings are not as fun when the owner has a gun too.

 

Compare gun hating DC to the immediate Virginia areas that have lax gun laws and the crime rates are vastly different. 

Dec 11, 2012 2:04PM
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More gun laws, that is the answer.. Near 500 murders in Chicago this year, how are those gun laws working for you??? Pretty good if your a gang member.
Dec 11, 2012 2:27PM
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OK....so I am with many of the self proclaimed RED NECKS posting.  I work hard every day.  Pay my taxes, feed my kids, and make sure I save for my own retirement.  I am proud to say I make sound decisions and do not need Uncle Sam to hold my hand.  I also do not need Uncle Sam to tell me what to feed my kids, how to get them to do better in school, and what a work ethic is.  Since my daddy was not rich...and no one paid for my college...I had to stop going.  From a solid work ethic and common sense I have achieved the American Dream of making very good money...and enjoying my life. 

I get tired of someone in some big city...telling me what I / WE need to do different to solve problems I nor my community have.  Live your life and let me live mine.  You don't want a gun...great...keeps the price down on the ones I want to buy.  You want someone to tell you how to feed your kids or get them to attend school....find a help group (plenty of NGO's to help).

 

But understand...MRS FOXY...I DO NOT NEED SOMEONE TO HELP ME WITH COMMON SENSE THINGS.  I grew up in a part of the country that common sense is still COMMON.

Dec 11, 2012 12:56PM
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It's just a year end sell off, before the tax hikes kick in. 

Stocks are down, but sales aren't.......
Dec 11, 2012 1:22PM
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Not sure where they get these numbers. In Texas the demand for firearms is always high.
Dec 11, 2012 1:14PM
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AMERICA IS DYING!!!

OBAMA IS DRIVING NAILS IN YOUR COFFIN AS WE SPEAK!!!!!

HELL - THE WHOLE US GOVERNMENT IS HELPING HIM - ALONG WITH THE MEDIA - STUPID VOTERS - HILLARY - MUSLIMS - THE 47% - DETROIT - AND TOO MANY OTHERS TO NAME!!!

ENJOY LIVING WITHOUT YOUR GUNS - HILLARY WILL SEE TO IT!!!!!
Dec 11, 2012 2:53PM
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I purchased my first gun when I was 12 years old with money I made selling boiled peanuts in a small town in S.C.  If it matters I am now 70 and own several guns and plan on buying a pistol for my wife and teach her how to use it so that if anyone makes an attempt to rob or kill her she will at least have a fighting chance.  I am a Viet-Nam vet, own my own business, never received federal aid and worth several million dollars.  If and when anyone comes to take my guns, my heart goes out to the first few because they will receive my bullets prior to my guns.  So, which part of this makes me a "red-neck"?  Or is it just because I happen to be white. 

Dec 11, 2012 2:01PM
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**** buying gun stocks as in stocks ,i rather buy more guns,ones with folding stocks !and add them to the "stock pile"
Dec 11, 2012 2:09PM
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The New world order wants you gunless for a reason...! They want to control your life and freedoms given by god to be free and soverign individuals. This New World Order crazies want to make you into slaves....in debt for your entire life from student load to bad investment and 401K's rip offs...and kill you as you get ready to retire with: Recreational drugs, smoking, unhealthy fast foods,bad drugs side effects, as you retire so they cut and reduse their Social Security liabilities......Your a worthless eater at that point and they want you dead. Depopulation foundations around the world have been gearing up for the final blow in the next 5 years....GET READY AND DEFEND YOURSELVES....!!!! THEY WILL TRIGGER A WORLD WAR...IF THEY HAVE TOO....!!!
Dec 11, 2012 1:46PM
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PhilEsteen said;
"At first we simply thought your 'logo' made you look like a whiney little 15 year old boy who only reads Mad magazine, but your politics are an insult to a child capable of reading above a third grade level. you managed to tie Faux News, NASCAR, guns and rednecks together in a big ugly white bigot bow."
Hey Phildo, Who's "we"?      You and the voices in your head????????
Actually, if you were capable of reading comprehension above kindergarten level, you'd see that clearly the FOxymoron was the one who tied Rednecks, NASCAR and Bigotry together. I just responded. So by bashing the tie, you only bash yourselves! hehehehehe
Tell me which of my statements was false, and statistically prove it.
Dec 11, 2012 3:59PM
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Same old arguments pro and against firearm ownership throughout this string of comments.  Anyone want to check out a few truths, try this:

 

The main reason for the 2nd Amendment was to provide for an armed citizenry who would be able to resist a tyranical usurpation of the Constitution.  This is confirmed in many of the private letters and writings of the very individuals that framed the Constitution.  Further, I don't think the argument that the Amendment applied to "muskets and black power arms" holds water as these men were intelligent enough to realize that armament would improve in the future and that black powder weapons would eventually go the way of the bow and suits of armor..


The second reason for the 2nd Amendment was to allow the citizen to have a means of self defense.  Again, while not specifically stated in the Constitution,  the letters and writings of our founding fathers support this concept completely.

 

Gun control does NOT equal crime and violence control.  Again, I grew up in the late 40's and 50's.  In those days one could obtain a firearm off the back of a comic book by just stating that you were over 18 years old and sending in the required money.  No proof of age, no background check, no license, no federal form to fill out.  A few days later your gun showed up in the mail.  I recall one particular ad that offered a 20mm anti-tank rifle if you had the money.  Crime was at an all time low.  A murder was front page news for days or weeks and there were no gangs or drug wars, but guns were much more available and easier to obtain then ever.  Almost everyone I knew had some sort of firearm including my father, a WWII navy veteran, who had two of those awful semi-automatic .45's. 

 

The anti firearms folks like to rant about the 20,000 or so people killed each year by firearms.  However that number includes gang and crime related killings, suicides and justified homicides such as shootings by police officers and citizens defending themselves or their family.  

 

Piers Morgan made an interesting statement on TV the other day and I had to agree with him.  In Britain they have strict gun control and only have 20 to 30 gun killings a year, agreed.  However, crime in general is up just as it is in gun controlled Australia and Britain is much smaller with a much lower population than the U.S.  Consider this, as the citizens are not armed, the bad guys don't need guns either.  A knife, hunk of pipe or a club will work just fine on an unarmed citizen especially if three or four skels jump a man with a wife and kid with him or break into his home   Also, people still commit suicide and there is gang and drug violence, just no guns.

 

Our problem is not firearms, it is the continuing break down in our society created by the very people that we have placed in positions of trust and power who now abuse it and this nations people for their own interests.

 

 

 

 

 

 

Dec 11, 2012 4:18PM
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which is why owning a gun

 

...is better than owning stock

Dec 11, 2012 2:35PM
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price of gas went down and it rained yesterday
Dec 11, 2012 5:07PM
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Wait until THSF and then see who the last Men and Women standing are. I am a Red Neck and proud of it.  I have a great family and job. As a veteran  I took an oath to Protect and Defend the Constitution. I still believe in that today. I have paid a boatload of taxes in my lifetime to a Government that all I expect from them is to provide a Strong Defense and Protect our Borders. Nothing more, nothing less its a very simple concept. My wife and I are both licensed to carry a concealed weapon and do so. We go out to a range  to shoot every month and are quite proficient  with several types weapons and yes we help keep the stock prices up for the ammunition and gun manufacturers. We will not surrender our 2nd Amendment right to either our Government or the NWO and they like the Criminal with intent to harm and after being warned will receive return fire until we no longer can do so.  Thanks to liberal thinking and the liberal media we are living in dangerous times.                    
           "I carry because a Cop is too heavy"  and  "When seconds count a cop is only minutes away"
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