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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136Comments
Dec 11, 2012 9:05PM
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Vigilance is awareness ....while snake eyes has come in a covert way, make no mistake about it...! The New World Order's WAY OF WAR has changed to buying it's way into power little by little generation by generation remember they print the money AND THEY ARE COUNTING ON ALL OF US BEING SELLOUTS...!!!. HOPING THAT WE FORGET CHANGING WORDS AND MEANINGS, WRITING CLEVER ABSTRACT TO ENTRAP AND DECEIVE. MAKE NO MISTAKE WE ARE AWARE AND A NEW WAR HAS COME IN OUR LIFETIME , in the last 3 generations wars have come and taken our BRAVE MEN AND WOMEN for their endeavors and greedy causes Oil - Drugs - Power - Obedience - Puppet Governments - Does this cycle sound familiar..? WE have a fascist Government now......make no mistake ALL 50 States want to peacefully Succeed .....Will this be the next Egypt...? GET READY....!!!
Dec 11, 2012 8:50PM
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FFret2006
     I don't read the bible, nor do I go to church anymore. However, I can and will defend myself against the lowest form of life on the planet. HUMANS!  Take a good long look at yourself, and see if you are any benefit to this planet. I won't say that all people are of no use, but the majority are.
     Guns are of no particular danger, only when put in the hands of the incompetent or evil beings bent on doing wrong. Hunters do the right thing in managing numbers since most predators have been eliminated from many areas. 
     I'm all for firearms, and have pity for the narrow minded.
Dec 11, 2012 8:37PM
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I'm not a red neck but do love the sport of shooting. I'm a social studies teacher who believes in the Constitution.  I'm also one of those who bought a new firearm, a new Browning model 1886 in 45-70 and love it. Libtards just don't know. 
Dec 11, 2012 8:34PM
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"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

 

 

attack of the killer tomatoes, invasion of the undead, end of the Mayan calendar

 

lmao

Dec 11, 2012 8:29PM
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It's in the constitution for a reason.  The guys that built this nation couldn't have done it without guns.  We couldn't have kept it without guns.   Our forefathers were pretty smart guys.  I'll go with what they said. 
Dec 11, 2012 8:19PM
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Really they should of went up, but as we see in America today people will not fight for their children and their future, We just push if off to the next generation to deal with. Plus slaves don't need guns and that's what we are tossing off onto our children's future. Slaves to this criminal government and the debt we are going to see triple in the next few years as O-Abomination gets more taxes to use for bigger spending on his 1-2 million a day parties and vacations to Hawaii..American already becoming slaves in their own homes since we can't afford to even leave home, surly no vacations as Obomination take his 12 a year,,

Dec 11, 2012 8:13PM
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Oh,Oh gun-lovers maybe the almighty market knows something you don't know.
Dec 11, 2012 7:26PM
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If the news actually reported on political, corporate, bank or wall street crimes, there would be no time left in the day to report on gun crimes. But these other crimes are not a priority to law enforcement; even though they are what cause the hopelessness that contribute to many gun crimes. They are the ones who want to take our weapons away before hopelessness turns into country wide rage and everyone knows where that leads and that is what they fear. This is why you see the media bombarding the public with negative ads and news concerning gun crimes.
Dec 11, 2012 7:09PM
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I wouldn't call nearly a 3 fold gain by Smith and wessons stock since 2011 a tumble , nor has the stock declined much at worst a small correction since the election is all i see. Who writes this crepe?
Dec 11, 2012 7:07PM
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I believe that every law abiding US citizen should be able to bear arms.  I also believe that the vast majority of NRA members are responsible gun owners who know safety and have respect for their firearms.  What I can't understand is how the NRA fights even modest restrictions on how can get a gun and how quickly.  Getting a firearm should not be as easy as buying one at a gun show.  There should be background checks and waiting periods.  Like in NYS, you should have to have references to get a pistol permit.  In fact, I would require people to go to an NRA sanctioned training class.  Why can't we have a sensible compromise that might keep guns out of the hands mentally unstable people.  I'm not talking criminals who will steal guns but mentally unstable people who may otherwise be law abiding.  
Dec 11, 2012 6:21PM
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swhc, smith and wesson is still trading at a high price. it had been floating at 4-$6 for a long time.
Dec 11, 2012 5:58PM
Dec 11, 2012 5:54PM
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They just need to stop NFL players from owning guns ! 
Dec 11, 2012 5:27PM
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I am a liberal too,but I want a big gun.
Dec 11, 2012 5:23PM
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i'm a liberal(bush pulled off the biggest real estate robbery of the middle class). at the same time i'm born & raised montanan:hunting, fishing,shooting gophers, etc.; and have enough IQ to realize if you make guns illegal, that it will just create another cartel,black market and criminals-me included!!! tempest fugit, dr dug
Dec 11, 2012 5:20PM
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"
Dec 11, 2012 5:04PM
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ANNOUNCER: Let's face it.

Your kids are gonna get into your guns. That's a fact.

Gun accidents can be avoided by introducing your children to guns as early as possible.

Hi, I'm Petey the Pistol. Do you ever get Ionely?

Yes.

Me, too. Hold me.

If you squeeze me, I make bad people go away.

Wait a minute. I thought guns were bad.

ANNOUNCER: False! Guns are good.

In fact, did you know that Jesus and Moses used guns to conquer the Romans?

So, remember, guns don't kill people, dangerous minorities do.

Dec 11, 2012 5:04PM
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Who cares?  The NRA has scared the public silly that Obama is going to repeal owning guns ~ that's never going to happen in our country.  What we should be focused on is the story in western PA where a guy & his 7 yr old were going to the gun shop & he forgot to unload his gun (and it went off killing his own kid). Not the first time that **** happened.  How do you prevent that from happening, gun owners? 
Dec 11, 2012 4:45PM
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mitt romney advocated for gun control legislation while governor of Mass.  yet the NRA people endorse him for president after he dons that obviously right off the shelf hunting outfit. mostof the money that the NRA gets is from the gun manufacturers(fact...look it up) and they dupe you people into buying more guns because they claim the dems. will outlaw them...can anyone show me gun legislation that Mr. Obama has signed?
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