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Industry Report: Rise in Gun Sales Prompts Industry Chaos

by Dylan Polk   |  January 30th, 2013 31
Blue-Book-Market-Demand

This chart represents demand within the consumer marketplace from January 2012 to the present. The Y-axis represents the consumer demand factor. High demand with little supply causes unpredictably high prices being paid because of the fear of anti-gun legislation. (Courtesy of BlueBookofGunValues.com)

Before December 2012, the firearms industry was riding out one of its best sales seasons of all time. Indeed, gun companies raked in the money thrown at them by eager consumers, resulting in not just the highest number of background checks in a single day—the FBI reported 154,873 background check requests on Black Friday—but also the best year for gun sales in recorded history.

To say then the gun industry was doing pretty well would be an understatement, and from the looks of things, it would take a real catastrophe to really change things.

And as we’re all painfully aware, that’s exactly what happened. Right around the time sales began to peak, a horrible tragedy suddenly put guns in the spotlight for all the wrong reasons, and all of a sudden those sales numbers either seemed trite in comparison, or were used to reflect what some talking heads deemed a violent, paranoid sect of American culture.

A proposed ban and other legislative regulations on firearm ownership has therefore sent dealers and companies into a frenzy, especially those that almost exclusively deal with semi-auto rifles that are so commonly referred to as “assault weapons.” These rifles—as well as all the high capacity magazines that go with them—have skyrocketed in value due to the unprecedented demand. In fact, it’s not uncommon to walk into your local gun store and find the ammo shelf almost completely picked over, or find that companies and dealers backlogging more requests than they can meet.

“The tactical firearms marketplace is certainly no stranger to turmoil—look what happened during 1989, 1994, 2004, and 2008,” said S.P. Fjestad, author and publisher of Blue Book of Gun Values. “The difference between what’s going on now and what happened back then is how fast things have changed.  Tactical firearms consumers used to take months to react to factors within the marketplace—now it can happen almost overnight!”

Indeed, the industry was almost immediately sent into a frenzy after the Sandy Hook shootings on Dec. 14. According to The Associated Press, the FBI reported the week following Dec. 14 saw the highest spike in background checks for a week-long period since 1998; the second-highest came not long after, when President Barack Obama announced his administration would be pushing gun control legislation during his second term. Those numbers continued to climb into the new year, CNN reports, with eight of the 10 highest days for gun sales recorded by the FBI.

“After the Newtown tragedy, it was clear that an assault weapons ban became a very serious focus of the White House and debates intensified on Capitol Hill, ” Rommel Dionisio, a Wedbush Securities analyst, told CNN. “That led to consumers flocking to stores to buy guns before they could be banned.”

That is, if they’re even able to get their hands on a gun. Public demand has outpaced companies’ ability to keep up, resulting in thousands of backlogged orders. Glock, for example, has a 10-month backlog, according to CBS Atlanta.

Demand for AR-15 variants is even higher. Earlier this month, Stag Arms reported two years of back orders on its rifles, prompting the company to not accept any new orders, according to The Boston Globe; the company has even gone so far as to recruit office workers to help packing and shipping in an attempt to beat any new restrictions that may be enacted in the near future. In the same article, Smith & Wesson noted $332.7 million in backlogged orders—nearly double its backlogged orders in 2011—and Springfield Armory also pledged to boost production through outside vendors and its own facilities.

Similarly, ammunition sales have skyrocketed to the point that both companies and vendors cannot keep up.

“We are hearing of spot shortages of some calibers of ammunition at retail,” said the National Shooting Sports Foundation in a statement. “Demand has been high for several years. America’s ammunition makers are working hard to safely produce and ship the quality and quantity of ammunition to meet that demand.”

The St. Louis Post-Dispatch reported area vendors staying up late to place orders with wholesalers while supplies last. What’s more alarming is how the shortage affects law enforcement agencies, which according to WTHR-TV have had trouble trying to maintain a steady supply of ammo. Some departments have even had to cancel training exercises.

“In years past, you could be looking at one, maybe two months. Now you’re looking at one, maybe two years,” Franklin (Ind.) Police Chief Tim O’Sullivan told WTHR-TV.

Click to enlarge. (Courtesy of BlueBookofGunValues.com)

The frenzied demand has in turn affected firearms’ values. Blue Book of Gun Values released a series of charts putting the public firearms demand in a visual format. The chart on the left displays the prices for four different AR-15s, AK-47 imports, three different high-capacity semi-auto pistol variations and high-capacity magazines, as well as both .223 Rem./5.56 NATO and 9mm ammunition.

As you can see, the prices for all—besides S&W semi-auto pistols—saw an increase between Dec. 14 and Dec. 22. After a slight dip, prices for most models continued to increase, though Bushmaster ARs saw a decline.

Ultimately, the fluctuation in prices completely disregards the true value of any given firearm.

“When fear, greed and speculation are the dominating factors for the demand of a specific firearms configuration, values are almost impossible to accurately ascertain,” Fjestad said. “It’s like a gun’s value is almost forgotten about, and price becomes the only consideration.”

Long term, Fjestad said, this could spell disaster for gun companies, which could see the value of its products drop dramatically.

“This is the largest and hardest stampeding ‘buffalo herd’ (tactical firearms consumers) I’ve ever seen in my 30-plus years in the firearms industry,” Fjestad said. “Are they destined to run off the cliff and plunge to their deaths? We’re going to find out in the next six months.”

For more information on current and weekly market insight, visit BlueBookofGunValues.com and sign up for an annual subscription.

  • bill

    "Rural America" needs to start rationing food deliveries to "Urban America".

    • Dan

      $10.00 happy meal? $15.00 # ground beef? The city people would freak. With another drought in the mid west this year this could happen so stock up on the beans, bullets, and band aids.

    • John Mose

      Bill, I like your thinking. Starve the liberals.
      Cut off the head of the communist beast, New York City first, and then Chicago. Should be interesting to watch Bloomberg and Rahm's constituents when they get real hungry.

    • guest

      I like this idea.So sick of the lefties in the burbs and the cities talking out of their a$$ about "gun culture" . idiots. they pay 12 bucks for a 2 lb. organically grown chicken. You want organically grown food? go shoot a deer a duck or a wild turkey.

  • BJC

    If this country is supposed to be run for the people and by the people than how can the government even consider any ban's when so many people obviously want the gun's they want to ban?

  • Ron

    Why would you take it out on your American brothers that happen to live in the city? Divide and conquer is just what these communist want. Done fall into their trap.

    • Joe

      My brothers do not exchange freedom for handouts by voting for those communists. The city people who put them in office are part of the problem.

  • Thomas D

    It's nuts out there you can't even find 22 rounds and when you can they went from 4 cents to 10 cents and who knows how much higher there going to go. At this rate the bad guys are going to have to go back to stabeing people again.Then congress will have to try for knife control I can see it now a back round check for a pocket knife.
    Well stay safe and God bless!!!

    • Kymn

      It is an offence to carry a pocket knife in or near premises that sell alcohol in Australia.

      • Pt101afs

        I had my pocket knife confiscated when I went into a museum in Mass.

  • http://gopnik.blogspot.com/ Jeff Albertson

    Good, informative article, but I'm not sure about the herd going over any cliff. Some guys paid "too much" for some engineering masterpieces (and some AK's. Relax, it's a joke, son). As for the manufacturers, their calculations of the economic future are as clouded as every private business' in our current post-modern regulatory cuckoo-banana regime. If anyone's going over the cliff, it's our foolish masters. The best weapon is between your ears.

  • Johnny

    Does anyone have a guess as to why the price of S&W semi auto pistols decreased?

    • mike

      because they are junk dude where the hell have you been lol

  • Tim-LV

    Google red and blue counties. Just a few little blue blotches we have stop shipping food to.

  • porkchop6209

    I wished that everyone, gov't., owners, the AG libs, Hollywood, etc, would all just settle down, relax and back off. Really people, we are about to become our own worst enemy. That being said, the firearms industry is about the only bright spot on the economic horizon, for that we should be proud. Now it's time to stock up on batteries, MRE's, storage containers, first aid kits, and warm clothing.

  • D. Edge

    I watched some Glock 17 Gen 4s go for over $950.00 on Gun Broker this past week.People are slap crazy.Bidding bullets,ect. up double price & lots of it was still available at regular price from Mid-way ect.Scared silly..

    • KSCCW

      I think GunBroker is just about the worst place to buy guns due to the prices. Their main advantage is you can probably find something hard to find. If you really, really need a specific gun and don't mind paying above retail (far above in many cases) then they are a decent source. Personally, I'm looking around and finding decent deals on firearms/ammo from other online sources.

  • upchuck47

    The comments above are stupid!

    The last thing we need is more chaos. You are playing right into the left win extremists hands!

    This is a time to Stand Up and defend yourselves,your families,your property,your Freedoms,your "inalienable" rights,your country and the American Dream turned Nightmare!

    Chaos is what got Obama and these corrupt,anti-American hypocrites elected.

    We need to become united not divided and take our country back!We need to protect the Constitution from those who have eviscerated it!

    Let's protect the 2nd Amendment as it is more important than ever! To punish innocents because of geography is crap!

  • Joe PO2

    Last fall, there were gun owners posting on this site saying they were going to vote for Obama because he had signed a bill allowing guns in national parks. Those gun owners owe the rest of us a big apology! They should post their apologies on this site.

    • kevin

      I just couldn't bring myself to vote for a Wall Street banker.

  • Jim

    I went into a gun shop last Friday. They had a few 20ga single shots, 2 Taurus revolvers ($1100ea), some off brand 1911 ($1750) and a Rock River AR. Asking price on the AR was $3400; M4 profile, box stock, mil-spec trigger and no optic. As disgusted as it makes me, the thing probably sold over the weekend.

    The question I have for execs at Glock, Ruger, Springfield and S&W is why the hell wasn't there an exponential increase in production to stay ahead of the demand curve late in November of 2012? They are the leaders of the firearms industry for gods' sake. I bought 5 AR lower receivers and two pistols, did the paper work and started my waiting period (10-days in CA) the Friday after the Presidential election. I guess these geniuses were apparently too preoccupied with the upcoming SHOT show party.

  • shootbrownelk

    We can also thank all the profiteers and hoarders for the shortage. You can also include semi auto .22's and .22 ammunition. I was just looking on e-bay, prices are through the roof on any hi-cap magazines. No .22 .223 or .308 ammo at any of the Large sporing goods stores on the internet. And you can't backorder on most sites. Pretty sad state of affairs that Obama & Biden put us in. Thank goodness I reload and have a few supplies on hand.

    • BJC

      Savor the components you have cause they are also nearly completely out of stock also. I was looking for .357 bullets to load and Graf, Midway, & Wideners had nothing in 158gr available. In off weights the only thing I could find were Sierra brand, this was last week they're probably out of stock now. And good luck finding any primers.

  • jarhead

    Are you all phsyco? A few irrational idiots spouting illogical ideas and you think the sky is falling. Instead of bitching and panicing, DO something. You can't have every toy you think you might need someday in case the world ends. If the world ends, AR's aren't going to help you. Ever think the gun lobby, including manufactures have set you up to NEED their product? You act like fools because you are. Our country is in trouble from many fronts. Spending all your money on unneeded weapons isn't going to get you a job or feed your family or anything else. I have hunted all my life and will till I die. I love my firearms too. Grow up.

  • Starky

    I say we in the midwest and the southern and northern plains start our own country. We raise all the crops. We have lots of cattle and dairy. We have endless oil, coal and natural gas. Hell they found uranium in ND. Those with common sence, work ethics and a belief in the constitution can live here. Let the libs have the east and west coasts states. I am sure there gvot. will issue lots of vouchers for food, clothing, fuel what ever they need and with enough catchup and salt the damn things might not taste to bad. Oh thats right libs don't use salt.

  • Earthling

    Any newly manufactured firearms or ammo entering the pipeline over the next year is likely to be rushed out with little quality control (all the QA guys were transferred to the shipping department for order fulfillment). Plus you have new shifts being added with novice staffing, or "outside suppliers" contracted (i.e. they had been stamping out barbecue grills for Walmart, but now are making firearms under contract). Likely a similar story for ammo. Wouldn't be planning any major purchases till sanity is restored,insanity could reign until Obama/Biden leave office.

  • Jäger

    I don't understand why anyone is upset that people are hoarding and speculating on guns and ammo. This is the United States. A capitalist country. When a hurricane is coming, we hoard food, water, batteries. Common sence. Is it wrong to RISK your hard earned money on oil, corn, or pork belly futures? If the prices drop and your still holding, you loose !!! Speculating on real estate or ammunition is risky, but it is as American as apple pie.
    If you don't want to risk your hard earned money, go to your local bank and buy a CD. There paying less than 1% but your money is safe.
    All bubbles burst and a lot of speculators are going to be left standing when the music stops.

  • porkchop6209

    On Friday Jan. 25th our local Dick's Sporting Goods received their shipment of 20,000 rounds of various calibers. They were gone in less than an hour. Yesterday, Feb.1st, at 8:45 the vestibule was so packed with customers the employees couldn't get in to go to work. They opened the doors at 9 and by 9:05 nearly everything they had taken off the truck was snatched up. All the local shops are reporting similar instances. Like I said before, everyone needs to settle down.

    • http://www.facebook.com/lewis.lehman.5 Lewis Lehman

      Don’t do business with Dick’s!

  • jjscholl89

    the liberals are directly responsible for a large percentage of the senseless deathes in america by causing fear n hysteria in the law abiding god fearing portion of the population of this nation. becuase of there ignorance in forthought of action. have to suffer through carry on and pickup the pieces of the tragedies like sandy hook. through hollywood and the media they sway public opinion with there liberal agenda. we cant focus on issues that badly need our attention. left to defend our second amendment rights even though hammers and screwdrivers kill more people in america every year than assault rifles do. but we have to put up with that because the first amendment covers ignorant people too. they want us to have laws like mexico. there should be no doubt in any sensible persons mind that if we listen to them they will turn us in to mexico in very quick succession

  • rb2149@aol.com

    how about what happened at the boston marathon today… not a single gun was used. and there were so far.. two people killed and numerous injuries?? my point.. does it matter how a loved one is killed… reguardless of age?? buy a hand gun, rifle. or a bomb ?? is congress going to try and add another bill for national back ground checks for people trying to buy various products to make a home made bomb?? wake up our country is in deep $$$t raising the price on ammunition and or adding different or new laws.. is not the answer…. if people want to over arm themselves.. then so be it… its our right*** so far*** as a free country

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