The coronavirus continues to spread panic across the world as more and more cases get reported and an increasing number of people choose to stay indoors. This disruption in daily life and the rising uncertainty about the future has led to people stockpiling groceries and other resources in their houses.
While this comes as no surprise, the outbreak has unexpectedly triggered the sales of another product – guns. It has been reported that people are increasingly buying guns and ammunition in order to protect themselves and their homes from potential looters as supplies dwindle with each passing day.
Gun sales have reportedly peaked in states such as Washington and California while others slowly seem to be catching up. This has led to speculation on gun stocks and analysts have their eye on companies such as American Outdoor Brands (NASDAQ: AOBC) and its peers.
Shares of American Outdoor have fallen 5% since the beginning of this year and 13% in the past one month. The stock is currently trading 19% below its 52-week high of $10.94.
Earlier this month, American Outdoor reported its third quarter 2020 earnings results, missing both revenue and profit estimates and causing the stock to plummet at the time.
However, total sales increased 2.9% in the quarter and the company had stated its belief that consumer demand for handguns remained strong in the period based on adjusted NICS background checks. Revenue from handguns increased 12% year-over-year in the third quarter.
During its third quarter call, American Outdoor had lowered its guidance for both the fourth quarter and full year of 2020. The company said revenue in firearms could be impacted by excess inventory at a few key strategic retailers. American Outdoor expects the fourth quarter revenue to range between $205 million and $215 million and full-year revenue to be between $650-660 million.
After a long period of gun control advocacy during which several retailers stopped selling firearms, the rise in gun sales due to the mass hysteria accompanying this pandemic is an unexpected turn of events. It remains to be seen how exactly American Outdoor is affected by this ongoing situation but it is likely the company might see an unexpected pickup in sales which could be reflected in its upcoming quarter.
The stock was up over 15% in midday trade on Monday.
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