An impending vote on concealed carry reciprocity may have bumped share prices for major gun makers up 3 percent this week.
Stock for American Outdoor Brands — the holding company of Smith & Wesson — and Sturm, Ruger and Co. closed 3.55 percent and 2.87 percent higher Monday. Share prices for Vista Outdoor — owner of more than three dozen companies in firearms, ammunition and shooting accessories, including Savage Arms, Stevens, Federal Premium, Speer and American Eagle — likewise climbed more than 5.6 percent.
The market reaction follows chatter on Capitol Hill over H.R. 38, the Concealed Carry Reciprocity Act of 2017, as it winds its way through committee in preparation for a floor vote later this week. Lawmakers will likely amend portions of the Fix NICS Act into the measure in an attempt to bring Democrats on board, Guns.com previously reported.
Fix NICS incentivizes states and federal agencies to upload disqualifying records into the databases feeding the National Instant Criminal Background Check System — the application gun dealers use to verify a buyer’s identity and criminal history.
The system came under scrutiny last month after a man gunned down 26 people in a Texas church with a rifle he bought legally — despite his domestic assault convictions and bad conduct discharge from the Air Force three years earlier. Military officials admitted failing to report the shooter’s criminal record to the FBI — an endemic problem dating back two decades. A review of Department of Justice records in 1997 and 2015 found roughly one third of service members’ criminal convictions were missing from federal databases.
Still, some Republicans worry conflating the two issues could waste money and further erode Second Amendment rights.
“Does the NICS background check system have problems? Yes, it results in tens of thousands of unjustified denials of gun purchases every year. But like many bills in Congress, the fix-NICS doesn’t live up to its name – it will likely do the opposite,” said Kentucky Republican Rep. Thomas Massie. “It throws millions of dollars at a faulty program and it will result in more law-abiding citizens being deprived of their right to keep and bear arms.”
Meanwhile, the upswing in market conditions continues a string of good news for gun makers and outdoor retailers after a long year of double digit losses. The industry received a welcome infusion of demand last month when background check applications exceeded 200,000 on Black Friday — the busiest day in NICS two-decade history, according to the FBI.
NICS checks serve as a proxy measure for gun sales, though the measurement isn’t exact.
Gun dealers submitted just over 20 million applications to NICS through Oct. 31 — about 9.5 percent behind 2016. Estimated gun sales — the sum total of applications submitted to the federal system for its handgun, long gun, multiple and other categories — surpassed 10.1 million last month. Compared to last year, sales declined 12.5 percent.
The numbers reflect an industry still re-calibrating under “a new normal.” President Trump’s victory stunned gun makers and retailers alike, many of whom amassed inventory in preparation for a Democratic electoral sweep and the heightened demand it would bring.
Instead, prices tanked as dealers tried to unload product throughout the year. Background checks ebbed and flow more in line with historical trends — a steady sales uptick in winter followed by a bottoming-out out over the summer, resuscitated in the fall as hunting seasons kick-off.
The industry’s most profitable weeks — aside from short bursts of demand following mass shootings, terror attacks or congressional action — set in Black Friday and will extend throughout the holiday shopping season.
Dealers processed 5.3 million applications in November and December 2016, alone — representing about one-fifth of the 27.5 million NICS checks completed last year, the biggest in the system’s two-decade history.
Similar numbers would place 2017 about 2 million checks behind last year, making it the second busiest on record for NICS.