The stock value of gun makers shoot up after the re-election of President Barack Obama as investors speculated that many Americans would purchase firearms before they eventually push for an anti-gun legislation that would require tough regulations against gun control.
The shares of firearms manufacturer, Smith and Wesson Holding Corporation (NASDAQ:SWHC) experienced the highest intraday trading since 2007, after surging by nearly 10 percent to $10.37 per share on Wednesday.
The stock price of Sturm Ruger & Company (NYSE:RGR) climbed by almost 7 percent to $47.68 per share after trading hours on Wednesday.
President Obama circumvented introducing any measure related to gun control during his first term in office. During the third presidential debate, the President noted the increase of domestic violence in the country committed by civilians who possess military assault weapons. President Obama indicated his plan to revive the assault weapons ban, which expired in 2004.
According to Benchmark Co., when President Obama was elected in 2008, the sales of firearms rose by 10 percent every year compared with the 7 percent growth rate between 2001 to 2007. Mike Greene, analyst at Benchmark said, “While we maintain our view that these political sales do not represent the entirety of recent firearms sales growth, we expect that, with President Obama’s re-election, these sales, could continue well into his second term.” He believed that the Congress will not support a heavily restrictive firearms regulation.
A report from Forbes noted an increased demand for firearms in the country this year, prompting Sturm Ruger to stop accepting new orders. The company cannot keep up with the demand. Ruger’s earnings last year increased to $40 million income on $329 million sales compared with its $9 million profit on $168 million sales in 2008.
On the other hand, Smith & Wesson’s earnings in 2008 climbed from $9 million on $296 million sales to $16 million on $412 million sales last year.
In a research note to investors, CL King & Associates analyst James Barret wrote, “President Obama’s re-election will be very positive for gun sales in the coming months.” He upgraded his rating for Smith & Wesson stock from “neutral” to “buy” and for Sturm Roger stock from “neutral” to “strong buy.”
Due to the soaring gun and stock prices, many have joked that Barack Obama is the best gun salesman in history.
