FBI Explains Why Firearm Background Checks Were Unusually Low In August
It turns out gun makers like Smith & Wesson Holding Corp (NASDAQ: SWHC) and Sturm, Ruger & Company (NYSE: RGR) may not have had as bad of an August as the FBI background check data for the month seemed to indicate. Gun stocks have sold off hard in recent weeks following the release of the National Instant Criminal Background Check System (NICS) data for August.
The NICS data revealed 1,853,815 checks in August. While that number represents a new August record, it also marks the first time in the history of NICS data that checks declined month-over-month in August.
After a Seeking Alpha writer reported that the state of Kentucky single-handedly fell 300,000 checks short of its normal baseline NICS total in August, Benzinga reached out to the FBI for clarification. Kentucky typically submits background checks on existing permit holders.
The FBI told Benzinga that Kentucky “was asked to delay their permit re-checks for a few days due to the implementation of new NICS in early August.”
Kentucky officials did not immediately respond to requests for clarification on when those delayed August checks will be reported.
For now, it seems clear that the August NICS number is likely an anomaly, especially considering Smith & Wesson’s quarterly revenue guidance came in more than 50 percent ahead of consensus expectations just days ahead of the weak August NICS number.
Considering the recent selloff was likely driven in part by the unreliable background check data, gun investors may have been provided an opportunity to buy Smith & Wesson and Sturm, Ruger on the dip. Both stocks are down more than 10 percent in the past month.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.