Smith & Wesson stock tumbled Friday after the gun maker noted softer demand with its Q3 miss on Thursday. Meanwhile, firearm sales dropped in February and the Trump administration paused issuing gun export licenses.
Smith & Wesson reported Q3 2025 earnings of 2 cents per share adjusted, dropping from 19 cents last year. Net sales fell about 16% to $115.9 million.
FactSet analysts expected earnings of 3 cents per share on $119.5 million in revenue.
The company's average selling price declined 3.1% during the quarter. The company maintained its full-year revenue outlook for a 5% to 10% decline from 2024. But given industry demand trends in recent months, Smith & Wesson expects revenue to decline closer to 10%.
That means a 2% to 5% decline in Q4 2025 revenue. Smith & Wesson also expects Q4 margins to be "several percentage points" lower than last year.
CEO Mark Smith in the earnings call noted that consumer discretionary spending has narrowed, and demand heavily skews toward newer products with lower price points.
"We expected postelection consumer demand to be relatively soft for our third quarter given the election results and impact of persistent inflation," Smith & Wesson CFO Deana McPherson said. Gun sales tend to be lower during Republican administrations.
"While our new products continue to perform very well, we are seeing lower demand for our core product portfolio, which is negatively impacting both our top line and margins," McPherson continued. New guns releases from the past year represented 41% of total sales.
Firearm Sales Drop
Meanwhile, gun sales fell about 9% in February during President Donald Trump's first full month under his second term, according to the firearms journal The Reload.
The National Instant Criminal Background Check System (NICS) found Americans bought 120,000 fewer guns in February compared to the same month last year. The number of background checks dropped to 1.22 million from 1.34 million, according to the National Shooting Sports Foundation. Last month marked the second-worst performing February in the last 13 years, with only 2018 seeing fewer gun sales-related checks.
Elsewhere, the Department of Commerce recently lifted a halt on firearm export licenses, according to The Reload. The department's Bureau of Industry and Security (BIS), which oversees firearms exports, on Feb. 5 issued a hold without action order for all export licenses. The bureau did so without warning, public explanation, or private communication with affected companies. The halt included all export licenses to all countries, including NATO allies.
"This is unprecedented," Larry Keane, general counsel for the NSSF told The Reload at the time. "That's never been done previously when there was a change in administration."
Keane heard the pause was lifted in late February "through the grapevine," shortly after The Reload first reported on the halt.
Smith & Wesson Stock
Smith & Wesson stock tumbled 10.9% Friday. SWBI stock has fallen nearly 46% from its 2024 highs in March. Shares are down 75% from their record high set in July 2021.
Among other gun makers, Sturm Ruger is up 12% year to date, trading just below resistance at its 40-week moving average. Chemicals and ammunition maker Olin is down 40% since the end of October.
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