Mass Shootings Are Good for Business, Say Gun Industry Executives
Behind closed doors, makers and sellers of firearms in the U.S. have told investors and Wall Street analysts that mass shootings are opportunities to make lots of money.
How does this happen? “Following a mass shooting, there is talk of gun control, which the National Rifle Association and other gun advocates attack as an assault on the Second Amendment,” writes Lee Fang at The Intercept. “Notably, gun and ammunition manufacturers often donate, either directly or as a portion of each sale, to the NRA. The fear of losing gun rights leads to panic buying, which brings greater profits to gun retailers, gun companies and their investors.”
“The gun business was very much accelerated based on what happened after the election and then the tragedy that happened at Sandy Hook,” Ed Stack, the chief executive of Dick’s Sporting Goods, a leading gun and ammunition retailer, said in September 2014 at the Goldman Sachs Global Retailing Conference. Stack noted that the industry saw “panic buying” when customers “thought there were going to be some very meaningful changes in our gun” laws. The new sales “didn’t bring hunters in” but rather “brought shooters into the industry,” he added. […]
Last year, Tommy Millner, the chief executive of Cabela’s, a retailer that sells guns, boasted at an investor conference in Nebraska that his company made a “conscious decision” to stock additional weapons merchandise before the 2012 election, hoping Obama’s reelection would result in increased sales. After the election, the Newtown mass shooting happened, and “the business went vertical … I meant it just went crazy,” Millner said, according to a transcript of the event. Describing the “tailwinds of profitability,” Millner noted Cabela’s “didn’t blink as others did to stop selling AR-15 platform guns,” and so his company “got a lot of new customers.” The AR-15 is a high-powered assault rifle based on the military’s M-16 model but without the full automatic capacity[.] […]
Smith & Wesson chief executive James Debney, speaking to the Roth Capital Partners conference in 2013, explained that “the tragedy in Newtown and the legislative landscape” resulted in sales that were “significantly up.” The “fear and uncertainty that there might be increased gun control,” Debney said, “drove many new people to buy firearms for the first time.
“You can see after a tragedy, there’s also a lot of buying,” Jeff Buchanan, the chief financial officer of Smith & Wesson, told investors at the RBC Capital Markets conference in September of this year. Buchanan noted that the political landscape of 2016 is uncertain, but that fear of gun control could be on the horizon. […]
Gautam Khanna, an analyst with Cowen & Co., a market research firm, interviewed Mark DeYoung, then the chief executive of ATK, an ammunition manufacturer, at the Cowen Aerospace conference in 2013. Khanna asked DeYoung if he would make pricing decisions based in part by the “Newtown shooting tragedy.”
DeYoung responded that “obviously we are all shocked” by “what happened in Newtown and what happened in Aurora, Colorado, and what happened in Tucson, Arizona, with Gabby Giffords.” But, he added, the company will continue to “respond to market pressures,” including increases in demand. On a separate conference call that year, DeYoung noted that certain “spikes” in demand have driven sales.
Fang cites Ladd Everitt, the director of communications of the Coalition to Stop Gun Violence, as saying that businesspeople’s rhetoric around mass shootings “doesn’t surprise me at all. […] This just shows the guys in the suits understand this and are utterly cynical about it.”
Gun manufacturers’ stocks did surge after the shooting in San Bernardino this week. The event fits within a trend that has seen gun-makers’ stocks quadruple returns on the S&P 500 over the past five years.
As The Guardian reported Thursday:
More than an hour after the stock markets opened, Smith & Wesson stocks were up by 2.62%. Stocks of Sturm, Ruger & Co were up 1.67%.
Gunmakers saw their stock rise even as the overall stock market fell on concerns that the Federal Reserve would raise interests later this month. […]
On Tuesday, the FBI revealed that last week on Black Friday the National Instant Criminal Background Check System performed a record number of gun background check. About 185,345 background checks were processed, a 5% increase from last year – and equivalent to about two a second.
— Posted by Alexander Reed Kelly.