Americans are buying rifles – Biden’s lead boosts gun stocks

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Joe Biden vs Donald Trump
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On the US stock exchanges, the prices of arms manufacturers’ stocks go through the roof. According to Smith & Wesson, the industry is barely able to meet the demand for rifles and pistols. Joe Biden’s lead in the polls over Donald Trump will rise shortly before the presidential election – and the prices of US arms manufacturers will climb with it. Many investors apparently assume that if there is a change in power in the White House, more rifles, revolvers and pistols will be sold and the shares of companies like Smith & Wesson and Sturm Ruger will go up even further. Investments in arms company stocks have paid off in the past few months. While the S&P 500 has gained 3.6 percent since the beginning of the month, Smith & Wesson has increased by 8.1 percent, and Sturm Ruger even increased by 9.5 percent. It looks even clearer if you look at the time since the beginning of the year: In 2020, the S&P will increase by 7.8 percent – Smith & Wesson to 135.4 percent, Sturm Ruger to 51.1 percent.

Many Americans have stocked up on guns in the past few months. The partly violent protests after the death of the African-American George Floyd in police custody may have contributed to this, as well as the fear that a narrow result of the presidential election on November 3rd could end in chaos. Just last month, the head of Smith & Wesson said his industry was barely keeping up with demand.

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Biden and his candidate for the office of Vice President, Kamala Harris, are advocating tougher gun laws – and in the short term that should further increase demand. “If we get a government from Biden and Harris, I would expect an increase in sales of modern sporting rifles, large magazines and corresponding ammunition,” said Aegis Capital analyst Rommel Dionisio, referring to rapid-fire rifles that are similar to military weapons and particularly high Promise profit margins. Analysts are looking at the experiences in the era of Democrat Barack Obama – who also advocated stronger arms regulation. From Obama’s election as president in 2008 to the election of Donald Trump in 2016, the shares of Sturm Ruger rose by almost 900 percent, the S&P plus of 113 percent looks puny in comparison. Biden, Vice President under Obama, proposes a ban on the sale of automatic weapons and their magazines, similar to the rules that were in place until 2004. Anyone who already owns such a rifle should either hand it over to the government or at least register it. The years under President Trump, however, have hardly paid off for the arms shareholders. The Sturm Ruger titles, for example, have only managed an increase of 16.5 percent since 2016, much less than the 66 percent at S&P. Republicans have traditionally been close to the powerful US gun lobby, and gun enthusiasts under their administration are not afraid that access to rifles and pistols will be restricted.

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