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Record 2016, December Softness
Even with the year-over-year decline in December, 2016 saw a record 27,538,673 background checks conducted compared to 23,141,970 done in 2015.
These numbers, in the FBI's own words, may not correlate to the number of firearms sold, although it sure is an indicative number. Checks may not conclude in a sale or alternatively one check, if found satisfactory, could lead to sales of more than one gun, as checks are done on purchaser and not on the guns a purchaser would want to buy.
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Gun Stocks Recover After Wednesday's Retreat
Following the release of the data, shares of gun stocks such as Sturm Ruger & Company Inc (NYSE: RGR) and American Outdoor Brands Corp (NASDAQ: AOBC), formerly Smith & Wesson, came under selling pressure. On Wednesday, Sturm Ruger & Company shares declined 1.03 percent and American Outdoor Brands fell 2.84 percent. However, both stocks have staged a nice recovery on Thursday.
Tough Comparisons Hurt December
Delving into the numbers, D.A. Davidson noted adjusted NICS data was down 17.5 percent year-over-year to 1,843,991 in December, lapping San Bernardino shooting. This compares to a 16 percent increase in November and a 12.6 percent hike in October. Notwithstanding the softness, the 2016 numbers still represented the third strongest December performance on record.
The firm noted that a mini-surge occurred in December and January 2015 due to mass shootings in San Bernardino, California, and Roseburg, Oregon. Despite this, California still saw 76.7 percent year-over-year growth in 2016, as more stringent firearm and ammunition regulations are set to take effect in 2017.
Analysts Andrew Burns and Michael Kawamoto do not believe the December sluggishness is a long-term trend. According to the analysts, the NICS data is likely to remain challenged, as we lap the brief December-January San Bernardino surge. However, the analysts see sequential improvement, starting in February.
D.A. Davidson is of the view post-election firearms data points will ultimately move towards the long-term secular growth trend of mid-to-high single-digit annual growth. Citing views of retailers and manufacturers, D.A. Davidson said shooting sports participation growth remains robust.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.