While 2020 will be remembered for any number of milestones, one that stands out is the explosion in gun sales.  While financial markets may hate uncertainty, gun sales thrive on it.  Fueled by the pandemic, civil unrest, and Biden’s victory in the November election, Americans sought out to purchase firearms at record rates in 2020.

The chart below shows monthly FBI background checks for the purchase of firearms.  After surging during the pandemic, background checks initially peaked in June at a rate of 3.93 million.  As tensions around the country cooled down and the virus numbers stabilized, the pace of background checks fell sharply over the next three months, but with Biden’s election in November, the pace of background checks quickly reversed course on concerns by gun owners of more restrictive policies with a Democratic administration. In December, those concerns helped to propel the number of background checks to a record 3.94 million.

On an annual basis, gun sales have steadily trended higher over the years, but the step-up in background checks in 2020 was unlike anything we’ve seen in at least 20 years.

For the year, total background checks surged over 40%.  Since 2000, that’s more than twice the percentage increase of the next closest year (20.6% in 2012)!

Despite the large increase in background checks, the stocks of the two publicly traded firearms producers haven’t followed the upward trend.  In the cases of both Smith and Wesson (SWBI) and Sturm Ruger (RGR), their stocks surged during the first half of the year as uncertainty was on the rise, but this latest wave of political uncertainty hasn’t provided nearly the same boost to their stocks.  Like what you see? Click here for a free trial to any of one of Bespoke’s premium membership options.