June 14, 2022 2:15 PM EDT

Mass shootings are becoming more common in America. Five years ago there were 358 such incidents, which are generally defined as shootings in which four or more people not including the shooter are injured. Last year there were 692. And by mid-June this year, there had already been 252. While the outcry about them is nearly universal—and more than half of Americans favor stricter gun laws—studies show that mass shootings often precede an increase in gun sales and a rise in the share prices of publicly-traded firearms manufacturers. In other words, they can be good for gunmakers’ bottom lines.

On May 24, the day a shooter opened fire on elementary students in Uvalde, Texas, stocks in Sturm, Ruger & Co. were trading at $63.62. A week later they were at $68.57, and later hovered around the $66-mark. Smith & Wesson Brands Inc. had an even steeper climb, rising 9.4% from $13.93 to $15.24 in one day, and have traded around $15 since.

One of the reasons for the uptick in share-buying might be that gun sales often spike in the wake of a gun tragedy. The number of FBI firearm background check requests—one measure of how many guns are being sold—rose above May’s monthly average in the days following the Uvalde elementary school killings.

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Background checks don’t always correlate with the number of guns sold, but a longitudinal study conducted in 2021 by trauma surgeons at University of California Davis correlated 20 years worth of mass shooting events with actual gun sales in California. It looked at the 20 most deadly shootings in the years 1996 to 2015, plus all mass school shootings during the same period, and found that gun sales rose in the 30 days after each event and again in December of that year.

“Although we can’t stipulate definitive causality, our thought was that in California new gun regulations go into effect January 1 every year,” says Dr Rachael Callcut, the lead author of the study. (She acknowledges that some of the gun buyers could also be holiday shopping during December.) Mass shootings have, the authors believe, a pile-on effect. People not only purchase guns to protect themselves from armed attackers in the days after the event, they also purchase guns before the year’s end to hedge against the implementation of any firearms bans the mass-shooting generates.

California is the only state to make its gun sale data public, a policy that was approved by the state’s former Attorney General Kamala Harris. The most recent figures, released in 2021, show a “continued escalation of month to month increases in firearm sales in California,” says Callcut. “At the end of our study, there was somewhere between 850,000 to 950,000 firearm sales in California yearly. And in 2020, it’s 1.16 million. So it’s continued to go up every year.”

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It’s not just guns that people want. Right after the Las Vegas massacre in which a gunman killed more than 50 people, demand for bump stocks—the device the shooter had used to enhance the speed at which he could fire—became intense. One manufacturer, Slide Fire, was forced to temporarily stop taking orders for the product. The devices were subsequently banned, and the ban is currently being challenged in the Supreme Court.

It wasn’t always like this. The California data shows that—with the exception of the 1999 school shooting at Columbine High School in Colorado—mass shooting events did not spark a buying spree until 2012. In early 2011, then Rep. Gabby Giffords was shot along with 18 other people in Tucson, Arizona. Six died, including a 6-year-old child. That was the first and most publicized of several mass shootings that year, three of which took place in California. And in December 2012, 20 first graders were killed at Sandy Hook elementary in Connecticut. In every year since, California has strengthened gun laws. And gun sales have spiked in December.

Mass shootings and gunmakers’ stock prices

The rise in share prices after shootings is also a recent development. Brad Greenwood, an associate business professor at George Mason University tracked 93 mass shootings between 2009 and 2013 and found that in the wake of massacres, especially those involving larger fatalities, children or handguns, investors generally moved out of gunmaker stocks. “During the early years in the Obama administration, you saw this negative effect when the mass shooting would occur,” he says.

He and his co-author Anand Gopal attributed this to investors being wary that gun laws were about to be tightened, thus potentially limiting the profitability of gunmakers. But the effect no longer holds. “What you’ve seen in the last few years is after widely publicized mass shootings, the exact opposite has begun to happen,” says Greenwood. “You actually see an increase in the stock prices of firms like Smith & Wesson or Ruger.”

While it’s impossible to isolate all the motives investors have for their decisions, Greenwood speculates that Wall Street no longer believes any kind of gun legislation is going to be sparked by mass shootings. He points out that there has been no meaningful legislative movement for many years.

On June 9, the House passed legislation that would, among other things, limit access to guns for teenagers, but nobody expects it to make it through the Senate, which struck a more modest deal to enhance background checks for those under 21 and provide funding for red flag laws that allow for the temporary removal of guns from people deemed to be dangerous.

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“I don’t think the business of guns is changing at all. In fact, I think people are doubling down,” says Greenwood. Because mass shootings can often spark an increase in gun purchases, investors may see the sense in buying shares of gun companies right afterwards. “[The stock price pattern] is really a function of the fact that there’s no belief that this thing is actually going to happen.” Moreover, there is a movement afoot among gun-friendly states to bar state agencies from working with banks that “discriminate” against firearm businesses. JP Morgan is no longer underwriting Texas bond issues for that reason, according to Bloomberg, although it is making a play to re-enter the market. The bank told Bloomberg last year that its business practices should allow it to be certified compliant with the Texas law.

Greenwood cautions that it’s become extremely difficult to study the interplay between of mass shooting events and stock prices, because such shootings are no longer unusual events. “Mass shootings within the United States happen with such frequency that actually determining whether or not there’s a causal relationship statistically is impossible,” he says. “We don’t have those those low periods where we can actually correlate the movement of the firm’s stock price with some other counterfactuals.”

Recently, investors in gun manufacturers have made their presence felt in other ways. At Ruger’s annual meeting of shareholders on June 1, a small group of shareholders proposed that the firearm company produce a Human Rights Impact Assessment, looking at the effect the company’s products was having through the lens of human rights. Ruger’s board did not support the proposal, but the non-binding proposal was put to the vote and passed. (Ruger did not respond to a request for comment.) The Connecticut-based company reported $728 million in net firearms sales in 2021, up nearly 29% from the previous year, which was up 36% from the year before. This year—at least before the most recent mass shooting tragedies— hasn’t started quite as strongly, with net sales of $166.6 million, as opposed the $184.4 million the company made in Q1 last year.

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