What happened

Once upon a time, gunmaker American Outdoor Brands (NASDAQ:SWBI) had a different name: Smith & Wesson. Now it's getting that name back -- and getting as much as an 11% boost in stock price (in trading earlier this morning) to boot.

Some of those gains have faded, but as of 1 p.m. EDT, American Outdoor Brands stock is still up a healthy 6.1%.

Smith & Wesson MP Shield 9 mm handgun being cocked

Image source: American Outdoor Brands.

So what

What exactly is going on here? Last year, as you may recall, American Outdoor Brands announced plans to cut itself in half by spinning off its outdoor sporting equipment division into a separate company. Yesterday, the company gave a bit more detail on what will happen.  

Effective June 1, 2020, the company will change its name back to Smith & Wesson Brands, and adopt a new ticker symbol, "SWBI," on the Nasdaq. Later on in the summer, the company will spin off its outdoor, non-guns-related business in a tax-free stock distribution to Smith & Wesson shareholders.

The spun-off business will then adopt the American Outdoor Brands name.

Now what

That's really about all there is to it. If you hold onto American Outdoor Brands stock today, then by the time stock markets reopen for trading on Monday, you will own Smith & Wesson Brands stock instead. At that point, however, only the name will have changed. A month or so later, you'll still own all the same businesses, but they will be grouped under two separate company names, with two separate stock tickers.

It's at that point that you'll have some choices to make: Sell the guns business if you don't like guns, sell the outdoor equipment business if you prefer guns over camping, sell 'em both, or keep 'em both.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.