Do gun stocks benefit from the regulation debate?

gun stocks

The recent shooting incident in the US has strengthened calls for gun control legislation. But paradoxically, mass shootings also lead to a surge in purchases of firearms, as Americans arm up for their own safety and over concerns that certain types of guns may become harder to purchase in the future.

Stockpiling guns and gun stocks

As consumers stockpile firearms in the wake of shooting massacres, investors also pile into stocks of gun manufacturers.

On May 25, the share prices of gun manufacturers rose after an armed 18-year-old stormed a public elementary school in Uvalde, Texas.

Smith & Wesson (NASDAQ:SWBI) and Vista Outdoor (NYSE:VSTO) jumped 6.9%, Sturm Ruger (NYSE:RGR) rose 4.1%, while American Outdoor Brands (NASDAQ:AOUT) climbed 7% on that day.

Stocks of these companies have also risen since US President Joe Biden took office as tougher gun policies get more attention under Democratic administrations.

“The gun manufacturers have spent two decades aggressively marketing assault weapons which make them the most and largest profit… For God’s sake, we have to have the courage to stand up to the industry,” Biden said in a speech at the White House shortly after the Texas incident.

Loose regulations

Prior to the Uvalde shooting, Texas Republicans have repeatedly loosened curbs on gun sales in recent years, according to local daily The Texas Tribune. In 2021, lawmakers passed a law allowing people to carry handguns without permits, less than two years after mass shootings in El Paso and Odessa in which 30 were killed.

Gun debate drags on

Despite the number of mass shootings (and gun violence in general), Americans and lawmakers remain polarized over gun control laws. Senators recently noted that efforts to pass bipartisan legislation are making progress as Republicans appear to be more amenable to changing the laws.

A recent Reuters/Ipsos poll of 940 people conducted online has found that nearly two-thirds of Americans support moderate or strong curbs on gun ownership, including 53% of Republicans. The poll was conducted a day after the Uvalde shooting.

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