Shares of gun manufacturers took a big hit Wednesday morning, after news that Donald Trump won the U.S. presidential election.
Gun stocks were on the rise in the days leading up to the election, reflecting the market's expectation of a Clinton win, which would have likely brought new gun restrictions.
A Wednesday note from Wedbush Equity Research said the election results are good for the "long-term viability of the [gun manufacturing] industry." However, Trump's victory, coupled with a Republican Congress and choice of Supreme Court justice(s), could be a net negative for Smith & Wesson as it "eliminates any realistic fear of gun regulation," analyst Gil Luria noted.
The threat of gun regulation had been a major driver of firearms sales over the past eight years, according to the note.