Smith & Wesson tumbles on disappointing guidance

Shares of Smith & Wesson Brands (SWBI) traded lower late Friday. The firearms company reported fourth quarter results that topped Street estimates. However, guidance for the first quarter disappointed investors.

Yahoo Finance's Julie Hyman and Jared Blikre discuss the stock's movement.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Stephanie Mikulich.

Video Transcript

Let's talk about Smith and Wesson.

That is another stock that we're watching today.

The shares falling after the gun maker warned of weakening demand in the current quarter last quarter, which was their fiscal fourth quarter actually was pretty good.

They beat estimates we saw sales there rise about 10% but the coming he now says that in its fiscal first quarter, sales are going to fall 10% year over year.

And we recently had the chance to talk to Steven Gats, founder of the Reload, which covers the industry and he talked to Yahoo Finance about why we may be seeing this lack of demand.

2020 was such an unprecedented record year in gun sales that we may still be experiencing a comedown from that four years later.

Uh People may also not be as worried about new gun bans uh because of action by the Supreme Court in 2022 as well.

So that helps explain a little bit about why Smith and Wesson might be coming out with this kind of guidance.

I mean, that was kind of the argument back in the day for so many companies that demand was being pulled forward for a bunch of services and products.

But let, let's go to the Wi Fi Interactive, I have a Smith and Wesson brands chart going back to the last century, the last millennium.

But these peaks are really interesting when they coincide.

What they coincide with this here is the global financial crisis 2008 or so.

Then we have the Trump election very contested election there.

Then we have the pandemic here.

That's 2020 another election.

And you can see that these spikes indeed getting bigger.

So you gotta wonder what's, what's gonna be the next catalyst.

I don't know.

Um and maybe it doesn't have to happen, but it's not surprising that after you have one of these peaks that you do have a lull in the action, it looks like these last multiple years, these cycles.

Well, the presidential election maybe would be the next uh catalyst.

Potentially, it tends to be for some of these gun buying trends.