Kyle Stock (l) and Michael Bloomberg (r).
Back last summer, Bloomberg propagandist Kyle Stock crowed that “Gun Sales are Down.” And it’s true that they were — relative to 2013. A year further on they’re still higher, than 2012.
Stock’s deliberate misrepresentation of the data is worth a little study, because it’s how propagandists work. In this case, he uses NSSF data and a redrawn NSSF graph, but mislabels the NSSF adjustment (whatever force is strong in this one, it’s not the force of integrity).
Coming off a year of record sales, the gun market is cooling off. And overeager gunmakers are still struggling to dial down their expectations.
In the recent quarter, Smith & Wesson (SWHC) sales dropped 23 percent, to $131.9 million, and profit plunged 45 percent, to $14.6 million, according to a report late yesterday. Long guns and “modern sporting rifles,” in particular, lost favor among shooters, but handguns cooled off as well. Smith & Wesson shares slumped almost 15 percent on the news.
Stock, in his ignorance of the industry and determination to score propaganda points for his wealthy lord, is jumbling several different kinds of data. NSSF adjusted background checks are a proxy, albeit an imperfect one, for unit volume. The imperfection is not just in the things that NSSF takes out of the data, like one state’s weird habit of running NICS checks monthly on every concealed carry license holder, and other non-sales-related checks, but also in that you can buy many guns on one NICS check. Our own last five NICS checks were for (1) four collector pistols bought at once at auction; (2) four AR-15 prototype receiver sets, (3) two AK receivers with parts kits, (4) six assorted lower receivers, and (5) three WWII weapons, including an NFA weapon. Here’s the equation: 5 NICS = 19 Firearms transferred. So we don’t know what the average multiplier on a NICS check is, but we know that, shorn of the non-sales transactions NSSF tries to adjust out, it is some value greater than 1. (Probably 1 decimal something small, because most transactions are still a single gun, but we don’t know, do we?). We also don’t know if that multiplier itself displays a secular trend, and if so, in what direction. So all NICS can be is a loose, longitudinal proxy for sales. Not much use as an absolute number, but useful for year-over-year comparisons.
To violate what we just said about the inutility of the absolute numbers, we note that the 2015 pace, if it is sustained all year, will still produce a near-record of over 20,000,000 NICS checks (our loose, longitudinal proxy for sales). NICS checks have nearly doubled in the last five years. However, over many years (NICS data back to 1998 is available) the sales in the second half-year always exceed the first half. There are doldrums in the summer and in February, and the peak is invariably December, with November a close second. Something happens in December in America, wherein guns are common gifts: it’s probably not fair to expect a Bloomberg hireling in New York City to understand this source of seasonality in the data.
The next data point he uses, which is not connected to unit sales, particularly, is stock price. Stock prices rise and fall based on firm performance, relative to market expectations. Journalists, who tend to be both narrowly and shallowly educated in storytelling alone, and to suffer from innumeracy, never seem to grasp this. So the market (somewhat unreasonably) expected that the feverish 2013 sales pace would continue, while everyone in the industry knew that the years of every-month-up-over-the-previous-year had to end sometime.
Sturm Ruger (RGR), another force in the industry, had similarly weak numbers at the end of July. Sales for Sturm dropped 13.4 percent, to $153 million, in the latest quarter, while profit slid by almost one-third, to $22.3 million.
Ruger and Smith are not the only “forces in the industry” — but they are the only publicly held companies, at least pending ATK’s spinoff of its sporting wing. So, as we all do, Kyle Stock is arguing from a very limited data set — privately held firms file no 10-Ks. The returns of Smith and Ruger are, necessarily, a second set of loose, longitudinal proxies for a complex and variegated industry. But note that he didn’t mention Ruger’s stock price’s doings. That’s because, unlike Smith, it has a long secular upward trend. If you’ve followed the stocks for years and understand the market a little (rather than, say, being a shallow journalist who skims until he fastens on a point he can slot into The Narrative®), you know that Smith is a much more volatile stock than Ruger (the standard deviation over a period is a measure of volatility, and Smith’s is much higher). So when Smith soars, it soars high; when it takes on on the chin, it goes all the way to the mat before getting back up.
The problem, according to both companies, is too many guns. Executives are grousing about “high inventory,” stubborn retail partners, and a glut of guns in such stores as Cabela’s. They are less eager to acknowledge that high inventory in any business comes from only two places: low demand and/or too much supply.
There have been many new entrants in some segments of the gun market. This is a common thing to see in a market segment where barriers to entry are moderate (meaning, it’s easier to go into business making guns than making cars, or airplanes, or pharmaceuticals): high profitability induces new entrants.
This week, Smith & Wesson’s chief executive, James Debney, went so far as to suggest that stores were just clogged up with the wrong guns—an “unfavorable mix” of “lesser brands and hard to sell products.” Sturm Ruger, meanwhile, took a similar tact, blaming itself for not producing enough cool new firearms.
Again, Stock is a paid propagandist for a billionaire. His mind, his soul, and most of all, his pen are for sale. His education and training are entirely in the use of words: to express ideas, to suppress ideas, to sway emotions. He is, if anyone is, supposed to be able to use the sailing-derived noun tack in a figurative sense for a change of direction without the amateurish error of using the mistaken noun tact in place of tack — if his education hadn’t been shallow and full of holes.
What the industry really needs is a few lawmakers advocating a gun-control bill. That’s what pushed the gun business to record highs last year in the wake of the Sandy Hook school shootings.
Whistling past the graveyard of his master’s gun control dreams, that last bit. Do gun-ban attempts drive sales? To some extent, yes, in three ways.
- Ban attempts pull sales forward, by providing an impetus for sales now that would have happened sooner or later anyway. A lot of these sales go to people already into guns who wanted another one, or always wanted an AR-15, and that kind of thing. You probably have friends in this category.
- Ban attempts bring fence-sitters off the fence. This includes both Fudds who were eyeing the modern sporting and defense gun market with curiosity, and people who were entirely outside the gun culture, looking in.
- By bringing new people into armed self-defense, or into gun sports or hobbies, ban attempts permanently raise sales levels. Some percentage of these people who weren’t engaged before become repeat customers.
So yes, there’s a spike, and the part that has Stock mumbling around his mouthful of Bloomberg reproductive tackle, is that a spike by definition subsides. But it subsides to a new, higher, level. This same thing will happen every time the Boston-Manhattan-DC-Chicago-LA anti-gun Axis pushes citizen disarmament.
Those fears, however, have largely abated, and gun sales have gone with them. Even reports of ammunition shortages are dying off.
via Gun Sales Are Down – Bloomberg Businessweek. (This has also appeared under the headline “People aren’t buying guns,” but it’s the same article, repop’d to double the propaganda value).
That’s what Stock was told to write, and that’s what he wrote, but what we’re seeing in 2015 and saw in 2014 is not some regression to the mean over the last 20 years, but a regression from the record year of 2013 to a level about equal with (and so far, ahead of) the previous record year, 2012. You’ll never see that under Stock’s byline, because it’s not what his sugar daddy hired him to say.
Stock floated this same concept before, in November, 2013, by misrepresenting NICS data then. Now there’s a bigger push to get the story out in Bloomberg’s media empire.
Bloomberg has his hirelings hot on this meme. For example, just in the last week, he has them grinding out:
Note well these bylines (and the editors, who are named at some of the links), and add Bloomberg chief anti-gun writer flunky Paul Barrett to the list. This is the propaganda team.
The appearance of all these variations of the same propaganda theme on Bloomberg-controlled media is no accident. But this concerted and centrally-directed propaganda campaign has a credibility problem: propaganda is only effective if it is wrapped around a truthful or at least plausible armature, and this one isn’t. Gun sales have subsided only to a new, higher level than the status quo ante. Will it be a hard time to be in the market with an undifferentiated, me-too product? Sure, but the last couple years, when even such a product would sell out, were anomalous. But a solid percentage of all those new shooters who bought a new gun over the two years of Bloomberg’s latest anti-gun jihad are just about due for another gun. The record of 2013 may not fall this year, but it will fall, and it will fall whether or not Bloomberg redoubles his paid, astroturf attacks. He can leave it alone and lose, or he can push harder and lose faster.
Now, there are network effects to consider. More people, who know more people, now own, carry, and shoot guns. As many as half the 20 million guns sold since Bloomberg renewed his ban efforts went to new shooters or gun owners. Each person’s social network expands the pool of people who know normal, sane people who rely on guns for defense or enjoy them for sport. Legitimate gun use for self-defense is even creeping in to the popular culture. The fastest-growing segments of the market are women and minorities, who are realizing that their belief in government authority’s duty to protect them was misplaced.
This is the best bullshit billions can buy, and really, it’s not that good. So, Bloomberg can keep squandering his money on these quasi-literate hacks from The Best Schools®, at any rate he desires. Attack us desultorily, our victory draws closer. Attack us furiously, our victory draws closer, faster.