America's gun spree could run out of ammo

rep308

rep308

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They don't know us very well, do they

CNN Money/Fortune

America's gun spree could run out of ammo

(breakingviews.com) -- Private equity shop Cerberus plans to float gun-maker Freedom Group soon. It had better hurry. President Barack Obama's victory sent weapon sales -- and the valuations of firearms producers -- shooting upward. Falling backlogs hint sales could plunge. The U.S. gun bubble may backfire.

Two sparks set off this speculative burst in the gun business. First, fears of economic calamity inspired sales of weapons -- Sturm, Ruger's 30 shot autoload SR-556 rifle is useful according to the company for shooting varmints and for "personal defense", presumably pesky biped varmints.

Second, gun collectors feared a Democratic president would restrict gun ownership. After all, you can't buy the SR-556 in blue-state strongholds California and Massachusetts.

There's plenty of anecdotal evidence of mania in the sector. Retailers reported ammunition shortages. Gun show attendance overflowed. Firearms factories are running flat out.

Meanwhile, insiders are preparing for a slowdown. Smith & Wesson diversified into security systems. Cerberus' decision to sell may be indicative of a top -- the durability of recent demand is indeed listed as a risk factor in Freedom Group's prospectus.

The figures are more damning. Total U.S. firearm sales should be around $3 billion this year. That's twice to three times as much as is typically spent according to estimates derived from Treasury excise taxes. Background checks over the past 12 months, which are a leading indicator of gun sales, were 50% higher than the levels reported during the middle years of the decade.

Naturally, rising sales lit a fire to stocks of gun makers and sellers. Armaments manufacturers Smith & Wesson (SWHC) and Sturm, Ruger (RGR) saw their stocks rise 115% and 85% respectively since the election last November. Hunting superstore Cabelas (CAB) has risen 70%.

This bubble may already be deflating. Smith & Wesson's backlog hit $268 million earlier this year and shrank to $177 million last quarter due to cancellations and fewer orders. Considering it only stood at $50 million in April 2008, the backlog could have much further to fall. Sturm, Ruger reported roughly similar figures.

This could prove painful for all involved. If sales fell to more typical levels of recent years, up to two-thirds of U.S. gun sales could disappear. And they could fall further. There are somewhere between 200 million and 300 million fireable guns (estimates vary widely) already in the U.S. Firearms have a very long lifespan if properly treated.

Gun buyers may well decide their now-stuffed racks don't need more company for a few years.
 
I think the economy is going to eat into sales. The fact that stores can keep black rifles on the shelves now, is somewhat of an indicator.

I bet, however, that even in the worst throes of recession, that gun shops will still beat other segments of the market in sales.

There's also a whole ton of people waiting in the wings to buy as prices come down to more normal levels... although I think the ammo backlog is
FAR from being over.

-Mike
 
drgrant said:
I think the economy is going to eat into sales. The fact that stores can keep black rifles on the shelves now, is somewhat of an indicator.

I bet, however, that even in the worst throes of recession, that gun shops will still beat other segments of the market in sales.

There's also a whole ton of people waiting in the wings to buy as prices come down to more normal levels... although I think the ammo backlog is
FAR from being over.

-Mike
Click to expand...

Agreed.

Meanwhile, insiders are preparing for a slowdown. Smith & Wesson diversified into security systems.
Click to expand...

Actually, with the economy and B&E's on the rise, that's what I would call an excellent business decision. [smile]
 
i rather own just a couple guns but i rather stock up on AMMO then GUNS if they are gonna last a long time then start stocking up on more ammo!
 
I'm probably a typical newly licensed gun owner, licensed about a year. I wanted a personal defense gun so bought a snubbie, 38. Then I wanted a good personal defense semi-pistol and bought a Sig P229, .40. Now I wanted a good 22 cal. gun to just shoot and bought a S&W 617 .22 revolver.

I'm done buying guns for the foreseeable future. Got what I need and will now just blast away. No need for any more.

If I wanted anything else I'd sell one of the guns I owned. But, that just ain't gonna happen.
 
One thing I noticed is that while you can usually find a good deal on something to BUY, I can never get a good deal for a sale. Therefore, what I have but don't really want, I tend to just push to the side of the safe and pay cash for what I wanted instead of getting screwed on the trade.

At least, that's how I explain away my ever increasing collection.
 
tuna said:
One thing I noticed is that while you can usually find a good deal on something to BUY, I can never get a good deal for a sale. Therefore, what I have but don't really want, I tend to just push to the side of the safe and pay cash for what I wanted instead of getting screwed on the trade.

At least, that's how I explain away my ever increasing collection.
Click to expand...
If you want to sell, try the WantADvertiser Publications. They have all sorts of categories, including firearms. Most liberal newspapers will not allow you to sell firearms in their classifieds. You will be able to do a FTF with a FA-10 (remember, only 4 per year!). You will get a better price and the buyer will get a better deal by eliminating the middleman (sorry, FFL dealers!)
 
yanici said:
I'm probably a typical newly licensed gun owner, licensed about a year. I wanted a personal defense gun so bought a snubbie, 38. Then I wanted a good personal defense semi-pistol and bought a Sig P229, .40. Now I wanted a good 22 cal. gun to just shoot and bought a S&W 617 .22 revolver.

I'm done buying guns for the foreseeable future. Got what I need and will now just blast away. No need for any more.

If I wanted anything else I'd sell one of the guns I owned. But, that just ain't gonna happen.
Click to expand...


You need a good 12ga zombie gun [wink]
 
yanici said:
I'm probably a typical newly licensed gun owner, licensed about a year. I wanted a personal defense gun so bought a snubbie, 38. Then I wanted a good personal defense semi-pistol and bought a Sig P229, .40. Now I wanted a good 22 cal. gun to just shoot and bought a S&W 617 .22 revolver.

I'm done buying guns for the foreseeable future. Got what I need and will now just blast away. No need for any more.

If I wanted anything else I'd sell one of the guns I owned. But, that just ain't gonna happen.
Click to expand...

you've got a great battery right now. As you use them more, you'll appreciate the differences in all of them, and it will spark new ideas for you. You'll find yourself one day owning many more than you think right now. Have a good life kiddo!!! *S*[grin]
 
Like Zell Miller said "I have more guns than I need, but not as many as I want...."

The only thing stopping the average guy from buying more is Lack of $$$$ - gotta feed the munchkins & pay their tuition.......

Too bad we don't all get big-shot CEO-sized bonuses ;)
 
Arto said:
Like Zell Miller said "I have more guns than I need, but not as many as I want...."

The only thing stopping the average guy from buying more is Lack of $$$$ - gotta feed the munchkins & pay their tuition.......

Too bad we don't all get big-shot CEO-sized bonuses ;)
Click to expand...

Frankly, Arto, me thinks you nailed it.
 
Actually, I think the sales of guns and ammo will slow down eventually. This rally was sparked by Obama's election. I don't think it will be a permanent rise in demand.
 
M1911 said:
Actually, I think the sales of guns and ammo will slow down eventually. This rally was sparked by Obama's election. I don't think it will be a permanent rise in demand.
Click to expand...

Yeah, but some of the new gun owners created by this event will certainly find value in gun ownership beyond worrying about obama. This translates into higher overall average demand. We probably got more new gun owners in our ranks in the months during and after the election than in previous YEARS combined. Some of them might not buy a damned thing anymore, but a large portion of them are not going away.

-Mike
 
drgrant said:
Yeah, but some of the new gun owners created by this event will certainly find value in gun ownership beyond worrying about obama. This translates into higher overall average demand. We probably got more new gun owners in our ranks in the months during and after the election than in previous YEARS combined. Some of them might not buy a damned thing anymore, but a large portion of them are not going away.
Click to expand...
I think many of them bought a gun (or a few guns) and a pile of ammo. But I don't expect to see many of them on the range.

We've seen a lot more new members joining our club in the last year. But our ranges aren't any more crowded.
 
rep308 said:
They don't know us very well, do they

CNN Money/Fortune

America's gun spree could run out of ammo

(breakingviews.com) -- Private equity shop Cerberus plans to float gun-maker Freedom Group soon. It had better hurry. President Barack Obama's victory sent weapon sales -- and the valuations of firearms producers -- shooting upward. Falling backlogs hint sales could plunge. The U.S. gun bubble may backfire...

This could prove painful for all involved. If sales fell to more typical levels of recent years, up to two-thirds of U.S. gun sales could disappear. And they could fall further. There are somewhere between 200 million and 300 million fireable guns (estimates vary widely) already in the U.S. Firearms have a very long lifespan if properly treated.

Gun buyers may well decide their now-stuffed racks don't need more company for a few years.
Click to expand...

That's just plain STUPID! So basically "they" are hinting that very long-standing and successful company's in a successful industries experienced a boom, once the boom is over that industry will be in trouble financially? That's (once again) just stupid. It may have to adjust to supply / demand but I doubt it will be near that dramatic.

Personally, with advents in technology, multiple modern wars, another 3 years of "very interesting" political climate I think we're seeing the climb to what will be the height of individual firearms ownership and personal arms development in this country...the likes of which will go down in history and continue to grow for many, many years.
 
Last edited:
I just want to know when we're going to get piles of surplus ammo.
WWII was over in what, four years? Why can't we level Iraq and Afghanistan, build some nice suburbs and strip malls, and call it a day?


It seems like there used to be all sorts of military surplus, whatever happened to all that good stuff?
 

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