Gun Manufacturers See Profits & Stock Prices Dropping Badly

[il.bill]

This sure seems like a gun buyer's market for the time being.

Here is a link https://www.bloomberg.com/news/arti...maker-tumbles-as-gunmakers-battle-over-prices to a Bloomberg (gasp!) online article about gun manufacturers in general and Smith & Wesson's parent company American Outdoor Brands, in particular, slashing profit projections and having their stock prices dropping.


Two points that jumped out, voiced by James Debney, chief executive officer of American Outdoor.

1) "A record number of background checks, a proxy for gun purchases, during Black Friday had sparked investor hopes that gun demand had hit bottom. But that holiday buying was merely a sign that consumers were waiting for steep bargains, Debney said. The National Instant Criminal Background Check system dropped 12 percent in November from a year earlier."

2) "Gunmakers aren’t reducing production enough to meet lower demand, and inventories at independent dealers is high, Debney said. He cited competitors offering rebates of $150 on sport rifles, a level of discounting he called unsustainable.

“We have to defend our position and weather the storm -- ultimately until there’s a better balance between those production rates and the consumer demand,” he said after the close of regular trading Thursday. It’s unclear how long the discounting will continue, he said."

 

[jmr40]

I don't think anyone should be surprised. The market has been flooded for years with panic buys. The good news; If manufacturers want to sell guns I think the market is for oddball niche type guns. Everyone already has an AR and a 9mm pistol. But there are lots of guys that want to buy the less common stuff. I don't think they can sell a ton of any one item. But small runs of guns AND ammo for them will sell.

 

[CLP]

Ruger was today's biggest decliner on the NY stock exchange. Dropped nearly 8%.

On an unrelated note, Teva just made my day...

 

[Hokie_PhD]

I have the basics covered as far as carry guns, rifles, and shotguns. So am not going to buy anything unless it’s a deal and fills a specific want or “need”.

So I’d like to see more deals like S&W had with rebates or mags, ammo and mag loaders. I wasn’t in a position to take advantage of their last deal so I hope they do it again in a few months. Even better would be price drops. Personally I’d love to see S&W drop the SD line and lower the price in the M&Ps.

My wants are a semi auto shotgun and a 5” M&P 2.0. Well that and finish8ng my AR build and doing a few more as I enjoy putting ARs together.

My “needs” are to have guns that can duplicate the role of the ones I have to fill the one is zero, two is one adage.

I suspect many folks are like myself in that they’re no longer panic buying and instead buying wisely.

 

[Jim NE]

This sure seems like a gun buyer's market for the time being.

I agree with that. I think I saw a brand new S&W Bodyguard .380 on GunBroker yesterday for like $169. That's CHEAP. May have been the price after rebate, but still....You never even used to see them used at that price. I bought a brand new S&W 642 revolver for $250 earlier this year. I honestly don't see how anyone is making money at those prices. I'm guessing the only guys who are doing well are the little shops who are selling mostly used guns.

 

[JTHunter]

I don't think anyone should be surprised. The market has been flooded for years with panic buys. The good news; If manufacturers want to sell guns I think the market is for oddball niche type guns. Everyone already has an AR and a 9mm pistol. But there are lots of guys that want to buy the less common stuff. I don't think they can sell a ton of any one item. But small runs of guns AND ammo for them will sell.

As I have neither a 9mm NOR an AR (and don't want either), there is only one gun that I have even a remote interest. That is a Keltec CMR-30 in .22 Mag. The reason for that is I have the pistol (PMR-30) that uses the same magazines.
Otherwise, I'm happy with the few calibers I have - .22LR/Mag, .25 ACP, .32 ACP, .380, .38 Sp./.357 Mag, AK, .243, and 12 gauge. And I only reload for 3 - .380, .243, & .38/357. Simplifies life.

 

[0ne3]

I belive for some guns the price will drop, but not for many.

 

[BigBore44]

I think we’ve been so accustomed to the high prices from the panic that we’re seeing the deflated market as good deals. Well, compared to the panic prices, they are. But in reality, prices (for the most part) are pretty much what they should have been all along. If a stabilizing market is a buyers market, then yes, it’s a buyers market. However, will be at least another 2 years before I view this as a buyers market.

 

[JONWILL]

Ruger was today's biggest decliner on the NY stock exchange. Dropped nearly 8%.

On an unrelated note, Teva just made my day...

I might be mistaken but doesn't Ruger make more than guns. I heard they also make golf club heads

 

[Mike OTDP]

The good news; If manufacturers want to sell guns I think the market is for oddball niche type guns. Everyone already has an AR and a 9mm pistol. But there are lots of guys that want to buy the less common stuff. I don't think they can sell a ton of any one item. But small runs of guns AND ammo for them will sell.

Yup. And whoever gets out of the AR/AK/1911/Glock clone rut first will do well. Others...well, I expect some companies to go under.

 

[Tirod]

There's lots of interest for guns - look at used gun sales volumes and how pricing is sky rocketing for some older models. If there is a market it's not in plastic 9mm duty guns, and AR's have saturated their niche at present.

All metal pistols are what are selling, despite the onus that they are "bricks" or unweildy. Yet the 1911's and CZ are trading at a brisk rate, along with 3Gen S&W's. Some are now even looking at older Rugers like the P89, and when the HP was said to be getting discontinued there was sadness. If you want to see how todays market is really working - go price an HK P7. They are selling for more than their MSRP which was high in it's day.

We are selling guns, we are not making the right guns right now. If Seecamps were offered in 9mm, or Remington can produce a reliable Rohrbaugh in 9, which it was in the first place, then we'd see more sales along those lines. The issue is that you can't buy what nobody makes - and plastic has run its course. When all you can buy is a Glock copy with SAFE trigger there's not much to choose from.

S&W would do well to offer a duty grade compact 9mm 3Gen as a toe in the water to test the temperature. If they can keep the original shape as much as possible and yet the price under $1000 retail then it would be an answer to the imported Euro guns. SIG does that very well - so how is it so hard to do? As long as gun industry management looks at short term profits then we aren't going to see things getting better.

 

[jmorris]

People are not panic shopping buying more than they can use in fear (sometimes hope) that they become grandfathered “contraband”.

So the sellers market has turned into a buyers market, where we get the best deals before they are SOL vs us.

if you want a sub $500 AR, if you paid $2000 for a DPMS and $100 per P mag, after sandy hook.

 

[Mike OTDP]

The industry was geared up for a Clinton win last November. Expected massive panic buys of ARs and 9mm pistols. Now...that whole scenario collapsed like a house of cards, everybody is sitting on inventory. It's a good time to buy an AR, in particular.

But if you're a gun maker? It's time to start thinking about getting out of the AR/AK/1911/Glock (or clone) area and sell Something Else. The real trick will be figuring out what sort of Something Else to sell.

I'll revise and extend my remarks here...

The concealed carry market is saturated, unless you can come up with something that is a significant improvement over what's on the market. A Glock 43 equivalent with a significantly better trigger would sell.

ARs? Complete saturation...and they've displaced everything else out of the EBR market.

Where would I go?
1. There's a market for a good .22 pocket pistol. Walther used to do a .22 PPK that was of quality steel...not the new potmetal fakes, but a good quality piece. Right now, we're seeing a lot of .22 pocket pistols that are very low quality. People want a better quality piece.

2. A premium version of popular guns. People are buying Glocks...and tossing half the pieces in order to replace them with better components. Were I a manufacturer, I'd be working up a premium gun with upgraded parts built in.

3. Integrated electronics. No more hanging stuff like lights off a rail, build it all in.

4. Whoever builds a red dot sight that is sized for a pistol (instead of overhanging the slide) will make $$.

5. Quality historical muzzle-loaders. I think black powder will make a comeback.

 

[Jeff H]

We all contribute to this. How many guns have you bought since Trump got in office? Myself, none, but my wife bought one. Under Obama, probably 15 or so over the 8 years. So, on average, my household bought 2 guns a year under Obama and 1 a year under Trump. It is amazing that their stock is only down 8%.

 

[Slamfire]

Cabelas had this Rock Island on sale for $399.00. I handled the one behind the counter and was amazed how tight it was. It took a couple of days but I went back and asked to pick the best out of three. The counter guy brought back two from the back. Well those and the display made three. The one I picked was amazingly tight. Between a Les Baer and Kimber tight, just amazing for a bargain basement pistol. What sweetened the deal was a $100.00 gift card I had!

Yesterday I went back and there were a whole bunch of people buying guns for Christmas. But, I do think the panic is over, and prices are stabilizing. There are some deals to be had if you look.

 

[CoalTrain49]

I just purchased a new Sig P229, free shipping and 3 mags for less than $700. Some places are still trying to sell those for $1000. I have a feeling they might be setting on those for awhile at those prices.

The theory that the market is moving away from polymer might have some merit. I think they have always been overpriced for what they are. Sig just admitted that when they offered their new striker to the military for less than $300 per unit. Of course a mfg. is going to try and sell their product at the highest price they can but sometimes they get greedy. Colt lost the M4 contract to FN because of that. Now Glock just lost the latest military pistol contract because they thought they could buffalo the military about the actual cost of building a striker pistol.

The RI example above demonstrates that it doesn't cost a lot to build a good pistol. Most of the labor goes into fit and finish. If you notice there are no roll marks in the slide and the RIA in the frame was molded into it. All cost cutting that has nothing to do with how the pistol functions. The finish looks like a phosphate finish like that used during WW2 to cut cost and time to produce a firearm.

I think we have been paying way too much for what we have been buying for a long time. It's high time the consumer got a break.

 

[Kendahl]

I think some vendors haven't gotten the word yet. A couple of days ago, I was looking at Kahr .380s. A local gun store wanted $350 for a CW380 and $550 for a P380. Cabela's wanted $300 for a CT380. Bud's prices were $270, $377 and $227.

 

[CLP]

I might be mistaken but doesn't Ruger make more than guns. I heard they also make golf club heads

Maybe- I'm sure most of these companies make more than just firearms. Regardless, their stock didn't drop because of a slum in sales of putters. It had everything to do with the Black Friday sales. Though turn out was strong, what it indicated was that people had money and were simply waiting for specials. The problem is that the overall purchases have declined but not production which has led to an overproduction of stock. I suppose the writing between the lines is that there's likely more sales/specials to come...

 

[bnolsen]

We all contribute to this. How many guns have you bought since Trump got in office? Myself, none, but my wife bought one. Under Obama, probably 15 or so over the 8 years. So, on average, my household bought 2 guns a year under Obama and 1 a year under Trump. It is amazing that their stock is only down 8%.

I never bought a single gun during the obama admin, and no ammo either. Since this spring I bought an ar15, a police tradein hk usp 40c, a shield and a taurus pt111, and several thousand rounds of various calibers. All of it dramatically cheaper now than it was during those nasty 8 years. I hope my financial situation stabilizes as I would like to fill in a few more purchases yet.

 

[CapnMac]

We have to remember there's a significant disconnect between the Manufacturers and the Retailers.

Retailers have little or no choice but to sell at the price the market will abear. The manufacturers are largely stuck having to make the product for what the product costs to make.

The number of people in the middle add overhead to the process. The cost of shipping varies, too.

 

[forward observer]

I just hope the downturn rubs off on the collectibles market--like old Winchesters or Colts, but that may be just wishful thinking.

 

[CoalTrain49]

I just hope the downturn rubs off on the collectibles market--like old Winchesters or Colts, but that may be just wishful thinking.

I think that's a completely different market more akin to collecting art. People buy that stuff as an investment. Sigs won't ever increase in value, at least none of mine will.

 

[forward observer]

I think that's a completely different market more akin to collecting art. People buy that stuff as an investment. Sigs won't ever increase in value, at least none of mine will.

You are most likely correct. Rock Island auctions in Illinois just had their end of year upper end collectibles auction. This had a couple of half million dollar items in it, but most everything seemed to go really high---mostly all out of my range. I sent in a sealed bid on one Winchester in the bottom feeder's range for the estimated maximum of $2k. It went for $3500. It simply wasn't worth that in my estimation. In fact my bid was $200 over the Winchester blue book price.
Oh, well!

Cheers

 

[taliv]

the funny thing is for the past month, i've been wanting to buy a few ARs; take advantage of the low prices and the fact that mine are getting long in the tooth

i just can't make up my mind! can't decide what to get!

it doesn't help that what i've found is cheap stuff is super cheap, but the stuff i want is as high as it ever was, at least full price.

 

[CoalTrain49]

the funny thing is for the past month, i've been wanting to buy a few ARs; take advantage of the low prices and the fact that mine are getting long in the tooth

i just can't make up my mind! can't decide what to get!

it doesn't help that what i've found is cheap stuff is super cheap, but the stuff i want is as high as it ever was, at least full price.

A friend just bought a Daniel Defense V7. I'm not sure what he paid for it but he said there were no deals to be had from that company. He didn't care and he likes it a lot. I shot it but I'm not an AR guy so the whole experience was lost on me.