People fire an assortment of guns on the annual Machine Gun Shoot sponsored by Shooters Gauntlet on June 03, 2023 in Monroe, Pennsylvania. The shoot, which has been held since 2016, lets gun enthusiast and others shoot machine guns at targets in a controlled and secure wooded location.
Spencer Platt | Getty Images
The gun industry is finding its footing after a post-pandemic sales slump forced among the largest manufacturers roll back production.
In July, Americans bought an estimated 1.19 million guns, down 17% from the previous July, based on FBI data analyzed by gun watchdog site The Trace.
Nonetheless, while fewer firearms are being sold across the U.S, the business continues to be profitable as manufacturers adapt to satisfy changing consumer demand, develop a latest generation of weapons, and employ marketing strategies that increasingly resonate with younger, more diverse consumers.
Gun makers, in turn, similar to Smith & Wesson and Sturm, Ruger & Company have seen their declines stabilize. Smith & Wesson shares are up about 40% thus far this 12 months, while Sturm, Ruger is up 2%.
They’re assuring investors that their business models have weathered the slowdown and that a handful of positive trends will help the industry rebound.
Listed below are 4 trends which are shaping the gun industry today:
Market normalization
Several corporations within the gun market are slowing down production and slashing prices as they combat material cost increases and waning demand for his or her weapons.
Through the pandemic, more Americans than ever purchased firearms. In 2020, at the peak of the sales boom, latest gun ownership rates hit a record 21 million, based on trade group National Shooting Sports Foundation. NSSF uses FBI data and background checks to estimate latest gun ownership rates.
Nonetheless, by 2022, feelings of insecurity and instability experienced by many Americans amid the pandemic subsided, and so did the surge in firearms sales. Gun purchases that 12 months fell to 16.4 million, which is more akin to pre-pandemic numbers.
“The industry’s bottomed-out and has stabilized,” Aegis Capital analyst Rommel Dionisio told CNBC.
Smith & Wesson, the country’s largest firearms manufacturer by revenue, reported fourth quarter net sales of $144.8 million, a 20% decrease from comparable quarter last 12 months.
On a conference call with investors, CEO Mark Smith said the corporate is “adjusting production rates to match normalizing demand patterns.” Smith added that “focused consumer promotions” have helped the corporate maintain its leading market share and retain profits.
In its most up-to-date earnings report, Sturm, Ruger & Company reported flat sales for its second quarter amid softening demand for a few of its hottest product categories like its polymer pistols.
Nonetheless, the corporate’s bottom line through the second quarter, while down from the prior-year period, improved from the primary quarter.
CEO Christopher J. Killoy said the corporate will “proceed to regulate our level of production and product mix to higher align our output with current, and expected, consumer demand.”
“It’s probably not taking place from here,” Aegis Capital’s Dionisio said. The industry, if anything, may even begin to ramp up production if there’s one other surge in demand led to by the 2024 presidential election. Gun sales typically see a spike during presidential elections, Dionisio added.
Smart guns
The subsequent generation of firearms seem like on the horizon: lightweight, cost-effective weapons that incorporate advanced technology and a few safety features.
Gun startups like Biofire Technologies are leading the charge with its 9mm handgun handgun that utilizes facial recognition and fingerprint verification technology to operate. CEO and founder Kai Kloepfer said the smart-gun, which is the primary to return to market after years of failed attempts by other corporations, may also help reduce accidental firings and suicides.
“Whenever you pick the firearm up, it uses either your fingerprint or your face to unlock, so only a certified user can fire it,” Kloepfer told CNBC.
Kloepfer said 1000’s have already placed preorders online, with some models selling out. Biofire said it cannot share specifics across the volumes produced because it is somewhat “sensitive competitively.”
Their guns retail between $1,499 and $1,899. Once they ship in December, they’ll change into the primary smart guns to enter U.S. circulation. Investors in Biofire include enterprise capitalist Ron Conway and Peter Thiel’s Founders Fund
Biofire’s smart gun comes as gun manufacturers increasingly look for various materials and technologies to make their products more appealing to consumers.
Mark Oliva, an executive on the National Shooting Sports Foundation, said red dot sights have change into a well-liked accessory amongst consumers in recent times.
A substitute for the more traditional iron sight, which requires shooters to glance through an optical telescope for aim, red dot sights project a small light directly onto a goal.
“My eyes don’t get any higher,” said Oliva, “so I’m one in all the individuals who’s converted to using a red dot sight on my handgun.”
Oliva also said the industry is popping towards more lightweight materials similar to polymer to make slimmer, more durable guns which are cheaper than metal or steel alternatives. Today, said Oliva, polymer could be present in every form of modern firearm, including those produced by startup Biofire.
Anti-firearm violence nonprofit Everytown for Gun Safety sees the positive potential in smart guns.
“Smart guns can be certain that guns are accessible by their owners and nobody else,” said Nick Suplina, senior vice chairman for law and policy at Everytown, who has tested Biofire’s smart gun. “Gun manufacturers now have a viable road map for innovating towards safety — and it’s on them to act.”
Changing demographics
The pandemic-era sales boom for firearms showed the face of gun ownership within the U.S. is changing.
Of the 7.5 million Americans who bought guns for the primary time between January 2019 and April 2021, half were female, a fifth were Black, and one other fifth were Hispanic, based on a study by Matthew Miller, a professor of health sciences and epidemiology at Northeastern.
In contrast, gun owners overall are 63% male and 73% white, the study found.
One other study by NORC on the University of Chicago noted similar trends.
First-time gun purchasers through the pandemic, based on the study, were younger than previous, pre-pandemic U.S. gun owners.
Eighty-six percent of first-time gun buyers through the pandemic were younger than 45. Prior to the pandemic, 41% of all gun owners were under 45, based on NORC. The group began tracking this data in March 2020.
“The concept gun owners are only old, male and pale is not holding true,” NSSF’s Oliva told CNBC. “Today’s gun buyers are more representative of America.”
Self protection
Gun owners are increasingly rating personal protection as the highest reason for purchasing a firearm.
Nearly three-quarters of U.S. gun owners cited protection greater than every other factor because the primary reason they own a gun, based on a 2023 Pew Research center survey.
The survey found respondents cited other aspects similar to hunting and sport shooting at 30% and 32%, respectively.
In 2017, when the survey was last conducted, 67% of respondents cited protection as a serious reason for owning a firearm.
This increase is consistent with how gun culture has evolved over the previous couple of a long time, based on a 2020 survey by online academic journal Palgrave Communications.
Many manufacturers, especially amid the social upheaval experienced inside the U.S. over the previous couple of years, have moved away from themes of hunting and recreation to advertise their guns, and have as an alternative leaned into themes of private protection and self defense to achieve consumers.
“Although we recognize the continuing existence of varied subcultures of guns within the U.S., these changes suggest the movement of self-defense to the core of American gun culture today,” authors for the study said. “With this shift, previously dominant subcultures like hunting and recreational goal shooting have change into more marginal.”
This can also be consistent with what varieties of guns have risen in popularity. Oliva said he’s been seeing gun buyers gravitate towards handguns, similar to semiautomatic pistols or “glocks,” that are more compact, easily concealed and designed for self defense.