Gun stocks are muted in early trade
Stock prices of arms and ammunition companies often rise after mass shootings, with investors anticipating a spike in sales ahead of calls for tougher gun laws. But on Wednesday, the morning after a fatal elementary school shooting in Uvalde, Texas, premarket prices for major gun stocks were mixed, with Smith & Wesson up 1.5%, Sturm Ruger up down 1% and Vista Outdoor down 1%.
Shares of gunmakers have generally risen since President Biden’s election, as is usually the case under Democratic administrations when tougher gun control measures get more attention. On Tuesday, Mr Biden said it was “time to turn this pain into action” and Democratic lawmakers led the way to force a vote on legislation that would strengthen background checks on gun buyers, which had previously been blocked by Republicans.
Gun sales surged during the pandemic, setting new monthly records as some feared the outbreak could lead to civil unrest. It wasn’t necessarily a boon for some gun companies, with Remington filing for bankruptcy in mid-2020 for the second time in two years, struggling to repay debt and pay heavy legal fees. In February, the families of nine Sandy Hook school shooting victims settled a $73 million lawsuit with Remington, which made the AR-15-style rifle used in the 2012 massacre. This was one of the largest and most important settlements to date, as federal immunity for gunsmiths provides strong protection against litigation.
Gun control advocates recently called on the Federal Trade Commission to investigate and regulate the gun industry like it did tobacco, alleging deceptive advertising practices. The State of New Jersey is pursuing a lawsuit against Smith & Wesson over the way it markets its products, seeking the release of internal documents.
The rise of “socially responsible” investing has shone a spotlight on arms manufacturers, who are often excluded from such portfolios. After Remington’s latest bankruptcy, some of its assets were acquired by Vista Outdoor, which announced this month that it would split into two, separating the ammunition business from its camping, sports and gear businesses. outdoors in the name of a “reinforced strategic orientation”.