Financial Analyst Calls Bump Stocks the ‘Sacrificial Lamb’

As major retailers, elected officials and industry leaders continue their quick back step away from bump stocks, one financial analyst said this week the gun modifiers and their chief manufacturer, Slide Fire Solutions, have become the “sacrificial lamb” of the Las Vegas shooting.

“After any horrible event, people need something or someone to blame,” said Maksim Netrebov, founder of New Jersey-based Maks Financial Services and contributor at Seeking Alpha, in an analysis of gun stocks Monday. “It seems that sacrificial lamb has already been found and slaughtered with the blessing of the firearms community and the NRA, Slide Fire Solutions and their bump-fire stocks.”

Bump stocks, a legal gun modification that increases the rate of fire, soared from obscurity into national headlines last week after the Bureau of Alcohol, Tobacco, Firearms and Explosives confirmed 12 of the modifiers were found in the Las Vegas gunman’s two-room suite on the 32nd floor of Mandalay Bay and Casino.

Typically retailing for as little $99, major retailers, including Walmart and Cabela’s, pulled the devices from store shelves in the days after the shooting. SlideFire Solutions, a Texas-based bump stock manufacturer, temporarily halted new orders. Requests for comment from all three companies went unanswered last week, though Cabela’s released a statement to the Washington Examiner Oct. 6 confirming their decision to stop selling bump stocks.

Describing bump stocks as a “fad item”comparable to the Snuggie, Netrebov said buying one “would only gain you ridicule” from other gun owners, insisting the public fervor around a ban is misguided.

“Bottom line, the company is a low-hanging fruit, and regulating bump fire stocks under the same rules as suppressors and short barrel rifles will serve as a ‘reasonable gun control’ measure from the gun lobby,” Netrebov said. “Slide Fire will make as much money as it can into the end of this year selling these devices and then likely cash out before the lawsuits come.”

“For the rest of the gun industry, nothing has changed and nothing is likely to change,” he added.

Netrebov argued share prices for major gun makers, including American Outdoor Brands and Sturm, Ruger and Co., will stay low as the industry wraps its mind around a new normal — which, he says, is nothing like 2016, the biggest year ever for gun sales. He doubts the shooting in Vegas and the congressional appetite for a bump stock ban will do anything to change that.

“While the October sales may be spurred temporarily by the Las Vegas shooting, I don’t believe it is sustainable in the long term,” he said.  “We all know that the stock price is based off of revenue and sales projections. 2016 was the firearms industry’s equivalent of 2005 for housing, where analysts did not want to consider housing can go down and made their decisions based on continually increasing prices. Things are going to adjust to the new normal, and unfortunately it is not 2016, at least not until there is another gun control advocate in the White House.”

Estimated gun sales in September fell 13 percent short of 2016, according to federal data. The weak turnout follows a “difficult” summer for gun makers and retailers still standing in last year’s shadow. Since the November election, stocks for Smith & Wesson and Ruger fell 50 percent and 26 percent, respectively. Both companies blame weak demand, with Smith & Wesson’s CEO predicting as much as a 17 percent decline in annual profits through 2018. Ruger’s second quarter net sales dropped 22 percent and its quarterly earnings fell by almost half compared to 2016.

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