Smith & Wesson stocks nosedive as company sets eyes on new strategy

Smith & Wesson stocks nosedive as company sets eyes on new strategy

I dont think that is the reason otherwise ruger would not have tanked also.

Firearms company stocks have dropped since Nov. 9th for some reason that I can't quite put my finger on. Additionally, I've seen a no doubt coincidental increase in ammunition supplies.

Other than Black Friday, firearms sales have dropped off quite a bit.

A friend of mine has made quite a bit of money on S&W stock over the past 8 years. He watches it closely and has noted periodic highs and lows. I expect he'll buy again now that it's low.

All of which is to say that this is just a normal variation in a company's stock price.

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Can open, worms everywhere.

"Publish or Perish"

"Diversify or Die"

S&W can no longer rest on it's primary item, revolvers. Their semi autos and AR's (MSP) are just another in the vast sea of firearms out there. They are branching out to other related markets which is a good thing.

Ruger has it's casting business which makes a lot of items for other companies They also seem more streamlined innovated and listen to regular customers (not the LE or Military contracts)

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Still Running Against the Wind

S&W also makes products for other companies. The last time I was there I saw forged parts for Harley and another company.

A couple of years ago they bought the company that makes the M&P pistol polymer frames. I'd expect that they also make products for other companies.

I was told that at one point Kimber 1911 frames were bought from S&W.

I'm not worried about Smith's viability.

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Can open, worms everywhere.

Trump won. The pressure is off to buy firearms. Sales are projected to slow. Gun stocks go down. The Democrats will be back. The market is all about the future.

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Foster Positivity.

I for one am not worried. I diversify my portfolio to help weather the ups and downs in 1 single investment category. This is what the gun, ammo and accessory categories are doing as well. It is just smart. From the following thread ( The 5 Best-Selling Handguns of 2016 ) you can see this post as I try to explain why I am not at all concerned:

To be transparent, I bought at $8.87/share. I have not sold any in the up or down cycles since. I bought on speculation and because I wanted to support an industry I believe in. I also have RGR, VSTO and OLN. AGAIN, no trades since they were purchased. And purchased for the same reason. This subcategory of my holdings was my "emotional" buying strategy.  

Now on to why I am not pessimistic about this category.

My thought process:
I do not own only 1 firearm
I suspect most of you do not either
From stats, many, many people are like us
Their/our reasons vary but that does not change the facts
YES, there is always risk involved. I am diversified to reduce this issue

There will always be reasons people will start buying again if they stopped temporarily:
New leadership
New threats to our safety
New, Cool innovations
etc...

There will always be new reasons for a newbie to get into buying. This year if you follow the news, a large % of the new gun sales are going to women. New businesses are opening up to cater to this new segment of the market. Multiple LGBT organizations are flourishing because of violence perpetrated against their own. A new organization called Black Guns Matter has risen. The NRA is now diversifying their public face to include different races, ages, genders, etc.

Radical terrorists are knocking on our doors
Homegrown terrorist are doing the same
Crime is at my door in the sticks just like at the Mall, WalMart, the Grocery store and at many doors through out the City.

And remember, you only lose $$ if you sell lower than what you bought it for (yes other factors can be debated like how that money might have performed in another stock, etc. That is where diversity comes in).

ALSO keep in mind that SWHC does not pay dividends. Might they some day? Who knows but it is possible.

Also keep in mind new acquisitions:
--"For the year ended April 30, Smith & Wesson reported accessories division sales of $65.3 million vs. firearm unit sales of $657.6 million, according to the Wall Street Journal."

--"Smith & Wesson purchased Crimson Trace from Crimson Trace Holdings, LLC, which is owned by private equity firms Peninsula Capital Partners, LLC and VergePointe Capital, LLC; Lewis Danielson, the founder and Chairman of the Board of Crimson Trace; a small group of minority members; and certain members of management."

--Its accessories unit, Battenfield Technologies, agreed to acquire knife maker Taylor Brands for $85 million in cash.

The acquisition will help the firearms manufacturer grow its accessories division by "expanding into adjacent and complementary markets," Smith & Wesson CEO James Debney said in a statement.

--What products and services does Smith & Wesson provide?
Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality firearms, related products, and training to the global military, law enforcement, and consumer markets. The company’s brands include Smith & Wesson®, M&P®, and Thompson/Center Arms™.

--YOU can do your own searches to see all under their current umbrella.

So, to sum it up I guess it depends on:
Why you bought,
If you really can afford to not touch that money
And are you willing/able to continue this level of risk.

We are all different with our strategies and needs. Should I suffer some catastrophic reason to need $$ this would be one of the last things I would sell. But like "you-know-whats", we all have an opinion!
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"I regard giving as necessary to right the balance..." Hu Chung
 
"Please remember the 2nd Amendment each and every time you vote".....Cork
 
"If one does not understand a person, one tends to regard him as a fool".......Carl Jung  

"...it's hard to explain...you can be much more alone with other people than you are by yourself...." Lucia Muir

“While open carry makes me uncomfortable (her words, not mine) my discomfort should have no bearing on constitutionally protected rights.” – Tyler Kee’s wife

I agree with Joe44va above that S&W stock is likely down because given the outcome of the election, gun rights do not seem as threatened as they did earlier in the year, so the rush to buy is off. (Nothing gooses gun sales like a threat to curb the 2A. Works every time. Kinda funny the opposition doesn't understand this.)

But I am not sure I agree that it is smart for S&W to diversify into clothing and such. It is a different business. I worked for a large aerospace company. I recall back in the '90s, amidst mergers and such, our top guy at the time commented that people often asked why we didn't diversify out of aerospace into, say, toothpaste. He remarked, to paraphrase, "It turns out it is darn hard to succeed in the toothpaste business, and we know nothing about it. We're better off sticking to what we know."

Another story: We had a plant that manufactured weapons. Used to have a lot of demonstrators at the entrance to the plant every day. One day a demonstrator is asked by the plant GM on his way into work, "Well if you don't think we should manufacture weapons here, what do you think we should manufacture?"

Demonstator guy says, "Well, uh, how about toasters or something?" The GM considers this a bit, shakes his head and replies, "Nah. You know how many times you'd have to hit a guy with a toaster to kill him?"

(Hey, that was the story going around anyway!)

Posted on another thread which delved into the name change a bit. Think it is appropriate in this link as well.

New Home Page for the new Company name American Outdoor Brands
UP 2.04% today (Yes will go up and down but I still like the stock) Also a neat bit of info on profitability: Smith & Wesson Holding Corp's Worst Business Segment in 2016 | Fox Business "While firearms sales recorded greater growth than did the outdoors and accessories segment, the latter carried better gross margins. Stripping out one-time expenses related to the acquisitions this year of Crimson Trace, Taylor Brands, and Ultimate Survival Technologies, the segment has margins of nearly 50% compared to around 42% in firearms.

Doesn't surprise me.

I knew the apocalypse was near when I saw Wilson Combat selling Glock parts. And lord only knows what Midway is selling these days. My wife can hardly wait for the S&W line of women's hairspray.

They tanked because they dropped 12% from record highs? The market goes up and down all the time. Only means something is you own that stock and want to sell it. Otherwise, its just a number in the newspaper.

Time to buy . . .

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Wisdom comes thru fear . . .

Did everybody forget this? My dad had a bottle. Guess he tossed it, because he sure didn't use it up . . .

Smith & Wesson Eau de Toilette for Men

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Wisdom comes thru fear . . .

I didn't realize it was a product and not a joke. I wonder if it smells as good as my guns after I clean them with G96?

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Dan
Ps 96 SWCA 2930 SWHF 524

With the price down a bit it just sounds like an opportunity to buy.

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- Change it back -

My wife actually prefers Hoppe's 9.......

I bought SWHC in Nov. of 2009
I'm still good.

A buy today?

It was a $10 stock two years ago. In those two years there's been a gun buying frenzy driven by fear of federal regulation pushing share price to $30. That fear is dead at least for the foreseeable future... hence the haircut to $20 while the broader market soared. Investors don't seem to be overly impressed with recent news of shifting focus from triggers to tactical tomahawks made in Taiwan.

Other than simple wishful thinking of buying a beat down stock and hoping the pain suddenly stops, what is going to drive share price back to 30 before it sees 10 again? About the only thing I can think of is a terrorist attack to drive gun sales. And if that's the bet, ya'll must be short the broader market hoping for apocalypse.

Buy gun stocks? Why? Well... maybe the wooden ones.

GA 1911,

I don't know what the margins are on a S&W logo multi-tool that sells for for $12.99 on Midway's website, or dimestore flashlights and combo match survival kits... and all the other stuff that S&W has slapped their logo on.

The market is so saturated with China dimestore stuff... seems odd for a fine gun company to hang their future on it. Apparently, slapping an S&W logo on "outdoor" junk has proved worthy to S&W executives. I can see how S&W logos on junk would help sell more junk than the endless other no-name tactical labels selling the same junk. I don't quite get changing the brand to American Outdoor Brands. Are they going to drop the S&W logo on all the dimestore stuff and switch it to AOB? Who knows... but investors don't seem overly enthusiastic about it at this point. Time will tell.