Why Smith & Wesson Stock Is Plunging Today

Not a good day for Smith & Wesson Stock

The stock for Smith & Wesson reported a huge second-quarter sales slump of 48%. The company reported that consumer firearms purchases declined significantly compared to the previous year, even as demand for firearms normalized again after last year’s spike.

Smith & Wesson Brands, Inc. is a leading U.S.-based firearms designer and manufacturer offering a broad portfolio of a quality handgun, long gun, and silencer products for the professional and consumer markets worldwide under the iconic Smith & Wesson®, M&P®, and Gemtech® brands.

Smith & Wesson shared second-quarter EPS of $0.26, $0.18 worse than analysts’ consensus estimate of $0.44. Revenue for the quarter was down at $121 million versus the consensus estimate of $159.93 million.

Smith & Wesson’s share price ended at $11.80. This means it is down -12.14% over the past three months and -33.97% over the past 12 months. According to Investing.com

These financial results missed the target by a vast margin. This news was not to the liking of investors, which caused the firearms manufacturer’s shares to fall this Wednesday morning.

Smith & Wesson Brands Team Communications

Mark Smith said, “While fiscal 2023 remains a year of recalibration and adjustment for our industry and Smith & Wesson, we expect to remain highly profitable and continue to deliver on our commitments to customers, employees, and shareholders well into the future.”

Also, Deana McPherson, executive vice president, and chief financial officer commented, “An ongoing inventory correction combined with the impact of our competitors’ promotional activity and consumers’ shift to lower-priced products negatively affected our quarterly sales. However, on a positive note, the discipline we have exhibited in promotions during the current quarter has improved our overall profitability compared to pre-pandemic levels, reflecting average selling prices approximately 45% higher than fiscal 2020.”

Now what will happen to Smith & Wesson Brands?

Some of the reasons given by Smith & Wesson for the drop may be true, but it does not provide many bases for optimism about the stock in the near term. Demand for firearms skyrocketed during the pandemic, a time of civil unrest, and now appears to be normalizing to a lower level.

And although Smith & Wesson has worked hard to improve the theme of its operations and remain as stable as possible during down cycles, there is no clear future for the company at this time. 

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