MAmerica is seeing more ass shooters. 5 years ago, 358 incidents like this were reported. These are shootings where four or more persons are hurt. There were 692 of these incidents last year. By mid-June, there were 252. While the outcry about them is nearly universal—and more than half of Americans favor stricter gun laws—studies show that mass shootings often precede an increase in gun sales and a rise in the share prices of publicly-traded firearms manufacturers. In other words, they can be good for gunmakers’ bottom lines.
On May 24, the day a shooter opened fire on elementary students in Uvalde, Texas, stocks in Sturm, Ruger & Co. were trading at $63.62. They traded at $68.57 a week later, hovering around $66 later. Smith & Wesson Brands Inc. had an even steeper climb, rising 9.4% from $13.93 to $15.24 in one day, and have traded around $15 since.
The reason for an increase in share buying could be because gun sales tend to spike following a gun tragedy. The number of FBI firearm background check requests—one measure of how many guns are being sold—rose above May’s monthly average in the days following the Uvalde elementary school killings.
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Background checks don’t always correlate with the number of guns sold, but a longitudinal study conducted in 2021 by trauma surgeons at University of California Davis correlated 20 years worth of mass shooting events with actual gun sales in California. The study examined the top 20 mass shootings from 1996 to 2015. It also looked at all school shootings that occurred during that time. Gun sales increased in the following 30 days and then again in December.
“Although we can’t stipulate definitive causality, our thought was that in California new gun regulations go into effect January 1 every year,” says Dr Rachael Callcut, the lead author of the study. She acknowledges that gun buyers might also be shopping for holiday gifts in December. The authors think mass shootings cause a “pile-on” effect. People not only purchase guns to protect themselves from armed attackers in the days after the event, they also purchase guns before the year’s end to hedge against the implementation of any firearms bans the mass-shooting generates.
California is the only state to make its gun sale data public, a policy that was approved by the state’s former Attorney General Kamala Harris. The most recent figures, released in 2021, show a “continued escalation of month to month increases in firearm sales in California,” says Callcut. “At the end of our study, there was somewhere between 850,000 to 950,000 firearm sales in California yearly. And in 2020, it’s 1.16 million. So it’s continued to go up every year.”
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It’s not just guns that people want. Right after the Las Vegas massacre in which a gunman killed more than 50 people, demand for bump stocks—the device the shooter had used to enhance the speed at which he could fire—became intense. Slide Fire was the only manufacturer that stopped accepting orders. These devices were then banned and are currently under challenge at the Supreme Court.
It wasn’t always like this. The California data shows that—with the exception of the 1999 school shooting at Columbine High School in Colorado—mass shooting events did not spark a buying spree until 2012. Early in 2011, Rep. Gabby Giffords, along with 18 others from Tucson, Arizona was gunned down. Six people, including a six-year old child, were killed. This was one of three mass shootings in California that occurred during the year. Twenty first-graders were also killed in Sandy Hook Elementary in Connecticut in December 2012. California’s gun laws have been strengthened every year since. The December spike in gun sales has been a result.
Mass shootings and gunmakers’ stock prices
A recent trend is the rise in shares prices following shootings. Brad Greenwood is an associate professor of business at George Mason University. He studied 93 mass shootings from 2009 to 2013 and discovered that investors moved away from gunmaker stocks in the aftermath of these events, particularly those with larger victims or children. “During the early years in the Obama administration, you saw this negative effect when where the mass shooting would occur,” he says.
Anand Gopal, his co-author, attributed the effect to investors who were wary of tightening gun laws. This could have a negative impact on gunmakers’ profitability. However, the opposite effect is now evident. “What you’ve seen in the last few years is after widely publicized mass shootings, the exact opposite has begun to happen,” says Greenwood. “You actually see an increase in the stock prices of firms like Smith & Wesson or Ruger.”
While it’s impossible to isolate all the motives investors have for their decisions, Greenwood speculates that Wall Street no longer believes any kind of gun legislation is going to be sparked by mass shootings. He points out, however, that for years there has not been any significant legislative movement.
The House approved legislation on June 9 that, among other items, would limit teenagers’ access to guns. However, nobody is expecting it to pass the Senate. Instead, the Senate reached a modest agreement to improve background checks and to fund red flag laws, which allow the temporary removal from dangerous people of firearms.
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“I don’t think the business of guns is changing at all. In fact, I think people are doubling down,” says Greenwood. Gun companies may make sense for investors if mass shootings cause an increase in gun purchase. “[The stock price pattern] is really a function of the fact that there’s no belief that this thing is actually going to happen.” Moreover, there is a movement afoot among gun-friendly states to bar state agencies from working with banks that “discriminate” against firearm businesses. Bloomberg reports that JP Morgan has stopped underwriting Texas bonds for this reason. However, it’s making an attempt to re-enter market. Bloomberg reported last year that the bank’s business practices would allow it to comply with Texas law.
Greenwood cautions that it’s become extremely difficult to study the interplay between of mass shooting events and stock prices, because such shootings are no longer unusual events. “Mass shootings within the United States happen with such frequency that actually determining whether or not there’s a causal relationship statistically is impossible,” he says. “We don’t have those those low periods where we can actually correlate the movement of the firm’s stock price with some other counterfactuals.”
Recent events have seen gun manufacturer investors make their voices heard in other ways. At Ruger’s annual meeting of shareholders on June 1, a small group of shareholders proposed that the firearm company produce a Human Rights Impact Assessment, looking at the effect the company’s products was having through the lens of human rights. Ruger’s board did not support the proposal, but the non-binding proposal was put to the vote and passed. Ruger didn’t respond to an inquiry for comment. Connecticut-based Ruger reported $728million in net firearms sales for 2021. This was nearly 29% more than the previous year. It also saw 36% growth over the same period last year. This year—at least before the most recent mass shooting tragedies— hasn’t started quite as strongly, with net sales of $166.6 million, as opposed the $184.4 million the company made in Q1 last year.
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