Smith & Wesson Stock Falls on Earnings Miss, Tariff Woes

Key Points

• Smith & Wesson stock drops 12% after weak Q4 earnings and lack of guidance, despite strong cash flow and low debt.
• The weak report threatens the fragile rally in SWBI stock that started earlier this year.
• Economic uncertainty and civil unrest could support seasonal demand for firearms, offering SWBI short-term upside potential.

Shares of Smith & Wesson Inc. NASDAQ: SWBI are down 12% after the company reported its fourth quarter earnings for fiscal year 2025 after the market closed on June 18. The firearms manufacturer reported $140.76 million in revenue in the quarter. That missed expectations for $153.41 million and was 18% lower than the $159.15 million it reported in the same quarter last year.

The same was true on the bottom line. Earnings per share (EPS) of 20 cents missed expectations of 23 cents and were 55% lower on a year-over-year (YOY) basis.

Smith & Wesson explained that tariff uncertainty is an overhang on the business. For that reason, it declined to issue full-year guidance for fiscal year 2026. That could be another pressure point for SWBI stock.

However, not all the news was bad. The company reported solid free cash flow and is operating with minimal debt, both of which support a high-yield dividend.

Plus, even though it didn’t offer specific guidance, it said it expected demand in the next 12 months to be similar to that of the past 12 months. Investors should also note that Smith & Wesson is entering a time of seasonal strength, particularly with longarm sales.

Traders Were Expecting Volatility

The downturn in the stock erases the gains that SWBI stock had made going into earnings. The options chain for June 20 showed strong sentiment among speculative investors for both calls and puts. The highest volume and open interest for calls was at $11. Conversely, there was elevated put volume at $9 and $10.

The earnings results are pushing the stock in a bearish direction. That sell-off could be a result of traders exiting the stock before a holiday, which comes just one day before the market’s “triple witching day” on June 20.

Will This Report Break the Weak Rally?

The report was a continuation of several themes that investors have heard for the last 12 months. Specifically, the company continues to deal with excess inventory and margin compression brought about by slowing consumer demand. The company is also navigating a difficult macroeconomic environment that is weakening consumer discretionary stocks even in defensive industries like firearms.

However, in 2025, the stock has experienced a small rally that indicates value investors are becoming more interested at a price around $8.50. That rally could be unraveling, but that may present an opportunity for swing traders to take a position as the company enters a time of seasonal strength.

3 Signals Point to Potential Upside for SWBI Stock

A stock chart can tell a story for investors who can connect the dots. In the last 20 years, Smith & Wesson stock has had three strong spikes. In each case, one or more of these signals were present:

1. Investors were concerned about stricter regulation, which pulled demand forward.

2. Economic uncertainty has the tendency to cause personal safety concerns.

3. Concern over civil unrest and crime will increase sales of handguns for self-defense.

Investors have been dealing with economic uncertainty for the past five years. Having this earnings report come out on the same day that the Federal Reserve held interest rates steady is not bullish for consumer spending.

Unrest in Los Angeles and the nationwide protest on June 14 are reminders that there is still anxiety and passion among Americans that could easily turn violent. Civil unrest concerns may not be as strong as they were in 2020 and 2021, but they exist at elevated levels in certain parts of the country and could increase as we move closer to the 2026 midterm elections.

Speaking of which, the one piece that may not align would be concerns over stricter firearms regulation. However, we live in a time when the election season starts earlier and earlier. That could mean that some consumers are already eyeing the potential impact on gun control laws if the midterms bring a change to Congressional leadership.

Any gains SBWI stock made in those times didn’t correspond to a long-term trend. Investors will want to see if analysts continue to be bullish on SWBI stock as they were prior to the report.