Gun Sales Skyrocket on Fears of Regulation

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“That table emptied out in an hour and a half Friday” went one conversation between a dealer and potential buyer at the Gibraltar Trade Center in Taylor on Friday. The conversation was concerning a table that was once packed with AR-15 rifles, and was not out of the ordinary. Among a large crowd of buyers, the few sellers on Sunday that had any high capacity semi automatic rifles (commonly known as assault rifles) remaining were asking a large premium for them, at times as much as a few hundred percent. While the dealers were all fairly picked over of the popular firearms by this point, buyers still buzzed around what remained, worried that this may be their last chance to get their hands on firearms such as the wildly popular AR-15. The worries stem from the coming gun control policy announcement on Tuesday from president Obama's pseudo-gun tsar, Joe Biden. In the announcement, the vice president is set to lay out some guidelines for new regulations on firearms in an effort to prevent tragedies similar to those in Aurora Colorado and Newton Connecticut earlier this year. Fears that these regulations may severely limit the right to own certain firearms has many gun owners and supporters like the National Rifle Association up in arms (pun intended), but that isn't the only effect they've had. Following the tragedy in Newtown Connecticut, firearm stocks Sturm Ruger
RGR
and Smith & Wesson
SWHC
both fell sharply, falling to three month lows off of near 52 week highs. What surprised some though was that following the few days of decline, the stocks started to rally, and rally hard. What caused the rise? News that firearm demand hadn't just increased, but was going through the roof. In a survey of two-dozen Michigan firearm sellers, 70 percent reported a sharp increase in sales over the past month, while 41 percent stated they were having significant trouble re-stocking their shops to meet demand. While some would think this shortage would only apply to the assault rifles that receive so much heat from the media, many owners stated that no matter the model of firearm, it was flying off the shelves. It wasn't just the firearms though, ammunition is also in high demand, with .223 and .556 rounds almost impossible to find in the state, and being offered at highly inflated prices. The massive demand and overdraw of firearms from warehouses is leading traders to believe the stocks are loaded for a gain. Since the tragedy in December, Smith & Wesson has gained just over 4 percent while Sturm Ruger has posted a staggering 14.03 percent gain. Both companies have earnings in roughly a month, and based on the demand look poised to crush estimates. Smith & Wesson traded down 1.20 percent Monday while Sturm Ruger gained just under 1.0 percent on the session.
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