After the massacre: Guns win, theaters lose
Firearm stocks are outperforming the market since the shooting, while movie chains are suffering.
While the rest of the economy struggled to add jobs and grow, employment within the firearms and ammunition industry exploded by 30.6% between 2008 and 2011. The industry's federal tax payments also soared by 66.5% to hit $2.5 billion. That's according to the National Shooting Sports Foundation, which earlier this year released a report highlighting these figures, and a nearly two-year-long string of month-over-month increases in the number of buyers requesting background checks in order to be able to buy new weapons.
It's too bad that one of those background checks was on alleged mass murderer James Holmes, who appears to have acquired the weapons used to kill 12 people and injure dozens more at a Colorado screening of the new Batman movie, "Dark Knight Rises," legally. Now the industry and its investors are holding their collective breath, waiting to see whether the shooting spree will claim their profits among its victims.
Michael Bloomberg, New York City's mayor, has taken a firm stance, calling on both President Barack Obama and the Republican Party's presidential candidate, Mitt Romney, to demonstrate some leadership on gun control issues. "This really is an enormous problem for the country," he commented on MSNBC's Morning Joe. "Where are they now and why don't they stand up?"(Both candidates have offered condolences to victims and to the families of the deceased; neither has made any forceful statements indicating they would take a tougher approach to gun control.)
Still, Sturm Ruger & Co.'s (RGR) stock has been on a tear recently -- upward. Evidently, investors aren't at all worried that either candidate could successfully implement new gun control laws, as the company's shares have risen 2.7% at the time of writing, to $43.72.
Gains at the only other publicly traded gun company, Smith & Wesson (SWHC) are more muted, but in neither case do investors appear to see the Colorado shootings as a game-changer. As in many election years, gun sales have soared. Smith & Wesson said earlier this year its order backlog was double year-ago levels while Storm Ruger -- whose sales hit a four-year high in the first quarter -- even temporarily stopped taking new orders in the spring, because it simply couldn't manufacture guns rapidly enough.
Clearly, in spite of the movie theater attack, the shooting of Representative Gabrielle Giffords last year, and other high-profile attacks using guns, the political impetus for tougher gun laws seems to be absent. Indeed, analysts attribute this year's flurry of gun buying to fears that a newly re-elected President Obama might crack down on gun ownership.
To the extent that events in Colorado fuel that fear, this may -- ironically -- be a good time to own shares of either gun manufacturer. That is particularly true since even if Obama does push for more restrictive gun laws, the push back in Congress may well end up making the health care debate look like a walk in the park.
Oddly enough, the stocks that are suffering today as a result of the news of the shooting are those of movie theater chains. Cinemark Holdings (CNK), owner of the movie theater chain at which the shooting occurred, is down 2.1% currently, despite having reported a surge in ticket sales in the first quarter and being likely to benefit further from sales of tickets to the "Hunger Games" during the second quarter. Shares of Regal Entertainment (RGC), the country's largest theater chain, are down 2.7%.
It's hard to avoid pondering the irony that the gun companies are trading higher in the aftermath of the tragedy, while those associated with the locale -- a movie theater -- are lower, apparently on concerns that moviegoers will stay home amid fears of copycat attacks. It's an unnerving contrast, but one that reminds us all that the stock market is a dispassionate assessor of risk and return.
Suzanne McGee is columnist at The Fiscal Times. Subscribe to The Fiscal Times' FREE newsletter.
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90% of gun owners couldn't hit a standard target if their life depended on it.
Buying a gun don't make you Rambo. It makes you a 7year old with a Corvette.
If you can't pass a marksman course, you shouldn't have ANY weapons.
For our children's sake, we must get rid of pencils!
What a sorry creature, confusing firearms with pencils. I suspect it also has trouble not only balancing a checkbook, but funding it also.
For our children's sake, we must get rid of pencils! All it takes is 1/4 of an inch into the heart and someone dies. Pencils are instruments of death, and our children handle them every day. Why arent more people outraged?
Down with pencils, outlaw pencils!
Homes is a coward. If everyone is armed, the cowards go away. We can see with Illinois being the only state holding out to OK Concealed Carry, it is a still a bastion of criminal activity and murders.
The crime rates have been going down around the country as the cowards no longer know who will shoot back. Too bad there wasn't someone in the theater that was armed to put a stop to that idiot. As it was when his weapon no longer worked, he ran away, which shows he is not insane. He knew exactly what he was doing and knew it was wrong. When things didn't go his way he took off. Don't blame an inanimate tool. The coward behind it has to bear responsibility for his own actions.
If someone had a concealed weapon in Aurora, Colorado Movie Theater the shooter would have be put down right away. Let’s talk about make concealed weapons legal! Texas has little crime even though it is a boarder state because of its relax firearm laws. If California was to relax its firearm laws it would be a much safer state. Instead only ones who have concealed weapons are gang members and boarder drug runners.
You really should have someone that knows the companies spell check the names for you. Sturm-Ruger, NOT Storm-Ruger. Seems you may have some type of agenda??
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