What Happened?
Shares of american firearms manufacturer Smith & Wesson (NASDAQ: SWBI) fell 19.1% in the afternoon session after the company reported disappointing first quarter 2025 (fiscal Q4) results as its revenue, EPS, and EBITDA fell short of Wall Street's estimates.
Management noted the quarter was challenging, citing macro and industry trends, which negatively affected volume. They added further that consumers were being cautious with the purchase of firearms, though they noted improved performance in newer products and lower-priced products. Overall, this quarter could have been better, given the macro challenges.
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What The Market Is Telling Us
Smith & Wesson’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Smith & Wesson and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 20.5% on the news that the company reported disappointing third quarter results. Its revenue, EPS, and EBITDA fell short of Wall Street's estimates. Management attributed the shortfall to a normalization in firearm demand, largely driven by inflationary pressures. They also observed heightened consumer caution around discretionary spending, which was more pronounced in the second quarter than previously anticipated. Given the soft demand trends, the company lowered its sales outlook for the next quarter and the second half of the fiscal year. Overall, this quarter could have been better.
Smith & Wesson is down 11.8% since the beginning of the year, and at $8.81 per share, it is trading 47.2% below its 52-week high of $16.69 from July 2024. Investors who bought $1,000 worth of Smith & Wesson’s shares 5 years ago would now be looking at an investment worth $476.61.
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