Smith & Wesson Stock Surges After Rioters Breach U.S. Capitol Building
Although American Outdoor Brands owns Smith & Wesson, both companies trade separately on the stock market. How does the corporation profit off Smith & Wesson?
Jan. 7 2021, Updated 10:54 a.m. ET
After armed rioters breached the U.S. Capitol building on Jan. 6, Americans were reminded about the business of guns. Across the security sector, stocks surged in response to the event. The stock for Smith & Wesson Brands Inc. rose by 18.4 percent from market open to close on Jan. 6.
Smith & Wesson was founded in Connecticut in 1856. After all that time, it makes sense that the company has grown in different ways. Recently, a split-off redistributed the business for the benefit of the greater corporation.
American Outdoor Brands owns Smith & Wesson
Until 2016, Smith & Wesson's overarching ownership fell under Smith & Wesson Holding Corporation. For political reasons — likely sparked by the 2016 presidential election — Smith & Wesson Holding Corporation decided to change its name.
The company became American Outdoor Brands Inc., but it was really just the name that changed. By August 2020, American Outdoor Brands decided to split off from Smith & Wesson in the stock market. As a result, Smith & Wesson Brands has its own stock that's separate from American Outdoor Brands stock.
Ultimately, the decision was made to separate publicly funded capital between the two entities in order to benefit the overall corporation. Politics continue to evolve and people change their minds about the efficacy of the retail gun industry, particularly in the wake of events like police violence and school shootings.
Even though gun stocks surge at times, the industry hasn't been immune to fluctuations related to current events. Before and after the 2020 presidential election, the security sector faltered.
Smith & Wesson stock trades on its own
Investors can find Smith & Wesson stock on the Nasdaq Exchange under the ticker symbol "SWBI." American Outdoor Brands also trades on the Nasdaq, but the company uses the ticker symbol "AOUT" instead.
For investors who choose to invest in American Outdoor Brands, they are also investing in various brands within the umbrella. Here's a list of some of the brands:
- Schrade (knives and tools)
- Bubba (fishing gear)
- Meat! (meat grinders and preservation tools)
- Old Timer (knives)
- Frankford Arsenal (ammo cases)
- M&P by Smith & Wesson (guns and recreational tools)
Clearly, American Outdoor Brands has a niche that it's sticking to. Smith & Wesson is by far the company's most widely known brand and it's likely the only one that's a household name. Spinning off on the stock market while retaining ownership of the company allows the corporation to profit off the brand and defend itself from market blowbacks.
Smith & Wesson's market cap is past the billion mark
Smith & Wesson wasn't the only stock that surged in response to the events in the U.S. Capital building on Jan. 6. Other companies like Sturm, Ruger, & Co. and Vista Outdoor saw their shares increase by 12 percent and 15 percent, respectively.
The shares for Digital Ally, which is a software company that works in tandem with law enforcement, rose by 30 percent.
Even with all of these companies in mind, Smith & Wesson's $1.26 billion market capitalization helps the company retain its solid position in a competitive landscape. Smith & Wesson's market cap isn't the biggest in the sector (Vista Outdoor has a market cap of $1.67 billion), but it isn't pocket change either.