Skip to main content

It's a sad paradox of the firearms industry: Mass shootings are great for business.

In a rational world, Stephen Paddock's deadly rain of bullets on Las Vegas concertgoers would be a harbinger of stricter gun laws. Americans sickened by the killings would demand swift action from Congress, spelling trouble for gun makers and vendors.

'Who did this to me?': How one mother and daughter went from a bachelorette party to a Las Vegas ICU

Story continues below advertisement

Globe editorial: Globe editorial: Donald Trump, hypocrisy and U.S. gun laws

Instead, the stocks of leading U.S. gun makers Sturm Ruger & Co. Inc., American Outdoor Brands Corp. and Olin Corp. are all up more than 5 per cent since Sunday's shooting.

Here's how the twisted investor logic works. Fear of stricter rules will cause enthusiasts to stock up on guns while they still can. That's exactly how buyers have responded to other major shooting tragedies.

Investors who followed that reasoning would have done extraordinarily well over the years, according to calculations by hedge fund Quantopian for the Reuters news agency. Buying gun stocks the first trading day after 20 major shooting events of the past decade and selling them 90 days later would have produced a return of 365 per cent. That's nearly six times better than what the S&P 500 did.

It's about fear, over reason. An epidemic of previous mass shootings have so far failed to move Congress to embrace stricter gun laws. And the prospects are even slimmer with a legislature controlled by Republicans, who have long supported the gun industry and the National Rifle Association.

The industry thrives on fear and conspiracy theories. That's why former president Barack Obama, who favoured stricter controls, was great for gun sales, and President Donald Trump is not.

Yes, it's true: Mr. Trump, the first U.S. President in a generation to speak at the annual meeting of the NRA, has not been good for the firearms industry.

Story continues below advertisement

"The eight-year assault on your Second Amendment freedoms has come to a crashing end," Mr. Trump told a crowd of cheering NRA faithfuls back in April.

Words that strike fear in many people have had the opposite effect on gun enthusiasts. Fear that government will scoop in to steal their guns is easing with Mr. Trump in the White House. The roughly one-third of Americans who own guns see little need to stockpile with a gun-friendly president in the White House and the Republicans in control of the House and Senate.

The gun industry has been pushing Congress to unwind old gun laws they don't like. House Republicans are trying to repeal a 1930s-era law that limits sales of gun silencers to civilians, selling it as a health measure to protect the hearing of gun users.

Until the Las Vegas massacre, the industry was in a Trump slump. Stock prices, sales and profit are all down industry-wide since the November election. Retailers have been heavily discounting because of an oversupply.

The industry had it a lot better when Mr. Obama was president. Even with stricter rules, handgun and rifle/shotgun sales were up 287 per cent and 166 per cent, respectively, from 2006 to 2013, according to U.S. Fish and Wildlife figures.

American Outdoor Brands, parent of legendary gun maker Smith & Wesson, had lost half its market value since Hillary Clinton lost the election. Ms. Clinton was a passionate advocate for stricter restrictions on gun ownership and for repealing a U.S. law that partially shields gun dealers and manufacturers from liability in mass shootings.

Story continues below advertisement

American Outdoor Brands lost $2-million (U.S.) in the three months that ended in July, down from a $35-million profit in same period last year. Sales are down nearly 40 per cent.

Sturm Ruger chief executive Christopher Killoy expressed frustration that fear is now the main driver of customer behaviour, rather than the sheer love of guns.

"We have to encourage our customer base to get back out to the range, blowing up some ammo. Enjoy the sport and get back into the store … to start buying more guns for fun, not just because you think they might be banned in the future," Mr. Killoy said after the company's profit tumbled last quarter.

And yet, in the upside-down world of U.S. gun sales, the Las Vegas shooting may be just what the industry needs to get back on top.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter