Springfield gun maker Smith & Wesson, which has lost 15 percent of its stock value since last Friday’s shooting at an elementary school in Connecticut, could suffer a long-term financial setback if President Obama succeeds in reviving the assault weapons ban he suggested on Wednesday.
Modern sporting rifles — the firearms industry term for the type of semiautomatic weapon Adam Lanza used to kill 26 people at Sandy Hook Elementary School — are far and away Smith & Wesson’s fastest growing gun line. In its most recent fiscal year Smith & Wesson sold $75 million of modern sporting rifles, double the previous year’s sales. It’s on pace to shatter that mark in 2013, and Smith & Wesson has hundreds of millions of dollars in backlogged orders for all its gun lines.
But the entire modern sporting rifle line could be in jeopardy after a new gun violence task force led by Vice President Joe Biden submits a list of gun policy recommendations to Obama next month. The president said at a news conference Wednesday that he selected Biden because the former senator from Delaware helped to lead passage of an assault weapons ban in 1994, which outlawed the style of gun that is now driving Smith & Wesson’s sales. That law expired in 2004.
Obama also suggested requiring background checks with all gun sales and banning the sale of high-capacity ammunition clips — two other limitations that may eat into Smith & Wesson sales.
Already some major retailers, including Dick’s Sporting Goods, have suspended sales of these rifles.
A spokeswoman for Smith & Wesson did not respond to an interview request, and the company has not commented on the shooting in Newtown. But the company known for handguns has made clear in recent financial reports that modern sporting rifles are increasingly important to its business.
In 2011, Smith & Wesson introduced 11 modern sporting rifle models “to enhance our competitive position and broaden our participation in the overall firearm market,” the company stated in its annual report. Smith & Wesson only began making these types of rifles in 2006, but it now claims a 15 percent share of a nearly half-billion-dollar business in the United States.
The industry leader with roughly half the market is the Freedom Group — a conglomerate of gun manufacturers that includes Bushmaster, maker of the .223-caliber rifle that police said Lanza used to murder 20 schoolchildren and their school leaders. The private equity firm that owns Freedom Group said Tuesday it would sell off the unit.
One of Smith & Wesson’s versions of the rifle, the M&P15 Sport model, retails for $739, a cheaper alternative to its other modern sporting rifles and to most Bushmasters, which cost about $1,300. The sport model still holds a 30-round magazine.
“There’s a certain class of gun owners who will spend $1,300 on a gun,” said Austin Dorr, a former world record-holder in trap shooting. “But when you bring it down into the $700 range, you’re opening up to another group.”
Sales of the sporting rifle have helped drive Smith & Wesson’s stock price from under $4 a year ago, to more than $11 per share earlier this year. But since Newtown, it has plummeted, closing Wednesday at $8.35 per share.
Modern sporting rifles are semiautomatic guns based on the AR-15 design developed by ArmaLight in the 1950s. Colt bought the design in 1959 and used it to produce M-16 rifles for the military. Modern sporting rifles are sometimes referred to as assault weapons or military-style guns, though gun rights advocates say such labels are inaccurate because the rifles are not fully automatic, meaning each trigger pull will fire only one bullet.
The National Shooting Sports Foundation declined to comment, but states on its website that “these rifles are used for many different types of hunting, from varmint to big game, and they’re used for target shooting in the national matches.”
But John Rosenthal, a skeet shooter who heads a nonprofit in Newton, Mass., called Stop Handgun Violence, disputes the utility of modern sporting rifles in hunting. “There’s nothing sporting about them,” Rosenthal said. “You get one shot when you’re hunting, generally. You want a smaller caliber because you want to do as little damage as possible to the animal, to the meat. These are designed for the military, to kill as many people as possible without reloading.”