It's a good time to be in the gun retail sector. Gun retailers across the United States are reporting increased sales in both guns and ammo, as Americans stock up against possible restrictions on future gun and ammo sales. The tragedy at Sandy Hook and the wave of copy-cat violence that has followed is clearly benefiting the bottom lines of gun retailers.
Major retailers have been quick to respond to the surge. Wal-Mart Stores, Inc. (NYSE:WMT) has now forbidden customers from buying more than three boxes of ammo per day. Walmart has stated that this is due to exceptionally high demand, which is draining its ammo supplies. Walmart is now the world's largest consumer gun and ammo retailer
According to Walmart these measures are being taken to protect the average gun user and ensure that everyone has access to ammunition. With sales spiking in the wake of the Sandy Hook massacre in Connecticut and the risk of future government restrictions many gun owners are rushing to stock up on ammunition. In December 2012, following in the immediate aftermath of Sandy Hook, Walmart actually ran out of some models of semi-automatic rifles in numerous locations across the country.
Wal-Mart Stores, Inc. (NYSE:WMT) has completely suspended the sale of certain gun models, such as the popular, Bushmaster rifle, which was found at the Handy Hook crime scene. So far, reports are mixed, but it appears that the Sandy Hooker perpetrator used pistols, not the rifle, during his attack. Either way, such “assault rifles” are now the target of looming government action to restrict gun sales.
Many smaller gun retailers are reporting that their gun stocks have been depleted in recent weeks and several smaller websites have stopped accepting orders. Prices have been soaring on high-capacity ammo clips and guns that may soon find themselves banned all-together. Prices on eBay Inc (NASDAQ:EBAY) and at local gun shows are also reportedly increasing at rapid rates. Some people are growing wise to the surge and selling some of their personal guns online in order to cash in on the quick profits.
One key indicator, back ground checks related to gun purchases, has soared. The National Shooting Sports Foundation reports that 2.2 million background checks were conducted in December of 2012, a 58% increase over December 2011. This suggests that many more people are trying to purchase guns. It should be noted that background checks are not needed in private person-to-person gun sales and at gun shows.
Even before Sandy Hook, gun sales and gun company stock prices have been surging due to President Barack Obama's re-election. Smith & Wesson Holding Corporation (NASDAQ: SWHC) shares have now been holding steady at $8.75, a two-fold increase from stock prices in January of 2012. Sturm, Ruger & Company (NYSE:RGR) stock prices increased from just over 40 dollars in December 2012 to $51 dollars as of February 2013. The stock is up several hundred percent since Barack Obama was re-elected in 2008.
In this tight environment, rumors have been spreading like wild fire. For example, Bank of America Corp (NYSE:BAC) came under fire after rumors spread that customers were being blocked from purchasing guns and ammo with their debit cards. Bank of America flatly denied this accusation and claims that it has not and will not restrict gun or ammo purchases.
With looming gun regulations, it is unlikely that gun sales will decline in the near future, unless the Obama administration backs off its gun reform efforts. Even if new regulations are enacted, many industry analysts do not expect to see gun sales themselves to decline, but instead that people will will simply start buying different kinds of guns.