What happened
Shares of AMMO (POWW 0.98%) soared 11.4% on Wednesday after reporting fiscal fourth-quarter earnings that showed sales rocketed 409% from the year-ago period, while adjusted profits surged 296% higher.
So what
The firearms industry remains white hot, with gun manufacturers Smith & Wesson Brands (SWBI 0.71%) and Sturm, Ruger (RGR +1.06%) seeing record demand from buyers. The sale of firearms is translating into even greater demand for ammunition, one that manufacturers are having difficulty keeping up with.
Image source: Getty Images.
Last year, 8 million people bought their first firearm, according to the National Shooting Sports Foundation, which is undoubtedly the reason why AMMO says, "Demand fundamentals in the US domestic ammunition market are exceedingly strong and we are seeing no indication of slowing."
Now what
AMMO will attempt to meet the burgeoning consumer demand for ammunition by building a new facility. It broke ground on a new state-of-the-art plant that it anticipates will be operational next year.
It also recently acquired Gunbroker.com, the largest online marketplace for firearms, hunting, shooting, and related products. It doesn't sell the products itself but provides an exchange for third-party sellers.
AMMO's guidance of $41 million in fiscal first-quarter sales includes two months of operations of Gunbroker.com. It says it will produce its first-ever quarterly profit.
