Gun Sales Numbers Show Americans No Longer Fear Firearm Legislation

The gun industry, which has boomed since President Obama took office, may be leveling off as fears that the president will restrict gun ownership recede.

Feb 20, 2014 at 12:31PM

Gun sales, which have been high since Barack Obama was elected president, may have finally begun to fall. Sales of firearms, which peaked after the Newtown, Conn., school shootings plunged in January.

According to CNNMoney, FBI background checks, considered an accurate means of tracking gun sales, dropped "by a third in January compared to the year before. There were about 1.66 million background checks last month, and nearly 2.5 million in January the year before."

Why did gun sales increase?

The National Rifle Association, which, to put it lightly, supports gun ownership, has since before Obama's first presidential victory pushed the idea that Obama would restrict gun ownership. Though the president did little in his first term to change America's gun laws, the NRA continued to aggressively suggest he would do so in his second term.

In an article headlined "The election before the knock on your door," Dave Kopel wrote on the NRA's website about the group's fears.

"Is it possible that Obama is as sincerely anti-gun as his long pre-presidential record indicates," Kopel wrote. "That he was telling the truth in 1996 when he said he favored banning handguns, and in 2007 and 2008 when he said that he thought the Washington, D.C., handgun ban was constitutional? That he meant what he said in 1999 when he proposed shutting down every gun store in the inhabited portion of the United States—via a federal law that would ban all gun stores within five miles of a school or park?"

This line of thinking from the NRA -- that Obama would restrict gun sales -- got gun owners to buy more guns and led anyone considering buying one to do so. This has been good news for gun retailers like Cabela's (NYSE:CAB) and even better news for manufacturers including Smith & Wesson (NASDAQ:SWHC) and Sturm Ruger & Company (NYSE:RGR) .

How many guns are there?

The website GunFAQ reports that as of March 2013, based on consolidated information from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, there are about 300 millions guns in the United States. The NRA agrees with those numbers.

"The number of privately owned guns in the U.S. is at an all-time high, upwards of 300 million, and now rises by about 10 million per year," said the NRA's Institute for Legislative Action in a firearms safety fact sheet released Jan. 17, 2013.

Has the gun-buying boom ended?

Obama, if he wanted to make restricting gun ownership a priority, likely would have done so already, and the gun-buying public may now realize that they can wait to purchase firearms.

"Retail inventories, which had been in short supply last spring, have largely returned to normal now," wrote Rommel Dionisio, a gun industry analyst for Wedbush, as reported by CNNMoney. "Monthly comparisons have recently turned sharply negative, a trend we expect to last through at least May or June 2014."

According to Dionisio, the "feared tightening of gun control legislation," which supported the boom in gun purchasing, has subsided.

Making guns is still a pretty good business

While people are no longer stripping the shelves of their local gun purveyor out of fear that the president will repeal the second amendment, guns are still selling well.

"Our adjusted National Instant Criminal Background Checks System data show that while sales have receded from the peaks of 2013, they are still ahead of 2012," National Shooting Sports Foundation Public Affairs Director Mike Bazinet told the Fool. "So, for example, December 2013 was the second highest December ever. The same is true for January 2014 -- down from January 2013 but still the second highest January. So we have come down from the peak but the valley floor is higher than before November 2012. The consumer base has grown."

According to Bazinet this growth is because about 25% of gun purchases are made by first-time buyers. "We have seen large increases in the number of first-time woman buyers who not only are seeking a firearm for personal protection but are finding that they enjoy target shooting as a group activity," he said.

Prospects for the gun business

While the gun-buying public may believe that Obama won't be able to regulate firearms purchases, the U.S. has a presidential election coming up in 2016. With Hillary Clinton as a possible candidate for the Democrats, it seems probable the drums will once again beat for people to stockpile guns now before President Clinton sends her liberal, gun-hating goon squad to take them away.

It seems that for the firearms industry, the threat of a liberal who might attempt to regulate guns is a sales tactic that moves product.

The next step for you
Want to profit on business analysis like this? The key for your future is to turn business insights into portfolio gold through smart and steady investing … starting right now. Those who wait on the sidelines are missing out on huge gains and putting their financial futures in jeopardy. The Motley Fool is offering a new special report, an essential guide to investing, which includes access to top stocks to buy now. Click here to get your copy today -- it's absolutely free.

Daniel Kline has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers