Gun Stocks in Focus as Supreme Court Weighs Hawaii Carry Law
A potential ruling against Hawaii's firearm restrictions could broaden Second Amendment rights, creating a potential catalyst for manufacturers like Smith & Wesson and Sturm, Ruger.
Investor attention is turning toward major U.S. firearms manufacturers as the Supreme Court considers a case that could significantly expand gun rights on private property across the nation. During oral arguments this week in Wolford v. Lopez, the court's conservative majority expressed deep skepticism of a Hawaii law that prohibits carrying firearms on most private properties open to the public, signaling a potential tailwind for companies like Smith & Wesson Brands (NASDAQ: SWBI) and Sturm, Ruger & Co. (NYSE: RGR).
The case challenges a restrictive Hawaiian regulation that presumes firearms are forbidden on private property accessible to the public—such as restaurants, stores, and hospitals—unless the owner explicitly posts a sign permitting them. According to reports from the arguments, several justices questioned whether such a broad restriction aligns with the historical tradition of firearm regulation, the standard set by the court's landmark 2022 New York State Rifle & Pistol Association v. Bruen decision.
A ruling against Hawaii could invalidate similar laws in other restrictive states like California, New York, and Maryland, potentially broadening the areas where licensed individuals can carry firearms. This outcome would be viewed as a significant victory for Second Amendment advocates and could stimulate long-term demand for the handguns and other firearms produced by Smith & Wesson and Sturm, Ruger.
The firearms industry, which includes Smith & Wesson with a market capitalization of approximately $477 million and the larger Sturm, Ruger valued at over $600 million, is highly sensitive to the legal and political landscape. The U.S. Department of Justice has also weighed in on the case, filing an amicus brief arguing that Hawaii's law "plainly violates the Second Amendment," adding federal government support to the challenge.
This legal battle comes at a time of other favorable developments for the industry. Earlier in January, a Department of Justice policy reversal effectively recognized firearm suppressors as protected by the Second Amendment, reportedly leading to a significant surge in sales for those accessories. While the stocks of SWBI and RGR saw modest declines in Tuesday's trading, the Supreme Court case represents a more fundamental, forward-looking catalyst that investors are monitoring closely.
Analysts and legal experts suggest the court's line of questioning indicates an inclination to further clarify and expand upon the right to bear arms established in Bruen. While a final decision in Wolford v. Lopez is not expected until the end of the court's term in June, a favorable outcome could provide a powerful narrative for gun manufacturers and their investors for the remainder of the year.