Why Shares of Smith & Wesson Shot Higher on Tuesday

What happened

Shares of Smith & Wesson Brands (NASDAQ: SWBI) climbed more than 10% on Tuesday, despite no company-specific news. The move instead appeared tied to national news, specifically the Electoral College effectively bringing to an end the U.S. presidential race.

So what

It's sort of a tired political saw to say one party wants to take away the guns, but consumers still tend to believe it and investors react accordingly. Gun sales tend to spike higher during Democratic presidencies on fears would-be buyers could eventually see sales restricted.

A handgun and bullets.

Image source: Getty Images.

Gun stocks all shot higher on Tuesday following the Electoral College voting 306 to 232 to make Democrat Joe Biden the next U.S. president. The vote seemingly spells the beginning of the end to a contentious election season, with prominent Republicans including Senate Majority Leader Mitch McConnell congratulating Biden after the vote.

Smith & Wesson soared 10% higher on Tuesday, and other gun-related stocks including Sturm, Ruger and Vista Outdoor climbed more than 5%.

Now what

If investors are indeed bullish on firearm stocks, it makes sense for Smith & Wesson to lead the way. The company earlier this month reported better-than-expected quarterly results and provided commentary to suggesting continued growth through fiscal 2021.

Smith & Wesson in a post-earnings summary said growth is coming "due to heightened demand for all major product lines driven by an increased consumer interest in firearms, likely resulting from continued concerns regarding the COVID-19 pandemic, recent events that have raised fears about personal protection, [and] uncertainty regarding the possibility of increased firearm regulation in relation to the recent political election."

Uncertainty is working well for firearm investors on Tuesday.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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