At face value, the so-called anti-woke movement seems to run counter to the prevailing sensibilities of most Americans. Over the last few years, the nation has come to grips with various social and environmental issues that require carefully crafted solutions. Nevertheless, the sharp rise in Ammo Inc (POWW) – a manufacturer of ammunition – presents an unmistakable contrast. Therefore, investors shouldn’t ignore the power of contrarian thinking for POWW stock and similar controversial assets.
Fundamentally, the horrific rise in gun violence imposes an unmistakable headwind for the broader firearms industry. Although proponents of the second amendment point to a national mental health crisis as a key catalyst – which to be fair is a legitimate concern – gun control advocates also raise red flags with how easily people can access firearms. As a matter of intellectual honestly, one can never fully take firearms out of the gun violence equation.
At the same time, it’s also unfair to not include the many positives associated with legitimate access to firearms. First and foremost, firearms help save lives in self-defense incidents. In full disclosure, victimization stemming from guns far overwhelm defensive gun use cases. Still, a firearm may be an imminent crime victim’s only solution. Organically, this dynamic may help POWW stock.
Second, the firearms industry employs hundreds of thousands of people. By the end of 2020, the sector totaled 153,414 direct jobs, 78,717 supplier jobs and 110,799 induced jobs. No politician likely has the audacity to cut American jobs – not heading toward a critical election year and certainly not during a rough time for the economy.
Possibly, members of the anti-woke movement sense some pensiveness in the left pushing certain political matters. And they’re making their voice heard – with so far measurable results.
POWW Stock Lights Up the Chart
Following a robust performance for the mid-June session, POWW stock closed the day up nearly 16%. So far this year, shares have jumped over 33%. Undergirding sentiment was an earnings print disclosed Wednesday afternoon that, while lackluster against the year-ago comparison, still managed to beat analysts’ expectations on the top and bottom lines.
Notably, POWW stock also represented a major highlight in Barchart’s screener for unusual stock options volume. Specifically, total volume reached 8,072 contracts against an open interest reading of 36,891. Further, the delta between the Thursday session volume and the trailing one-month average metric came out to 1,199.84%.
Drilling down, call volume hit 7,810 contracts while put volume only came out to 262. This pairing yielded a put/call volume ratio of 0.03, on paper significantly favoring the bulls. Moving forward, it’s not out of the question for POWW stock to continue benefitting from potential anti-woke sentiments.
In April, Barchart contributor Will Ashworth pointed out that Florida Governor Ron DeSantis encouraged people to boycott Anheuser-Busch’s (BUD) Bud Light. As you likely know, the brand used transgender personality Dylan Mulvaney in a company promotion, which infuriated many conservative consumers.
On surface level, it might seem to some folks that the boycott over a light beer brand speaks of buffoonery. At the end of the day, companies can do whatever they want (within legal limits, of course) with their advertising campaigns. Still, consumers also have the right to vote with their dollars – and their voice has made a discernible impact.
Around the time of Ashworth’s reporting, BUD stock dropped about $5 billion of market value since the controversy blew up on March 31. From the time of his article’s publication till the time of this writing, shares declined just under 9%. The fallout contributed to a year-to-date loss for BUD of almost 2%.
Like it or not, the anti-woke movement represents a force to be reckoned with.
Economics Still Rule the Day
Now, while it’s not wise to dismiss the influence of anti-woke sentiments, one shouldn’t go the other extreme either. At the end of the day, economic pressures tend to settle pressing debates.
For example, while BUD stock has been beaten and bruised because of the subsequent consumer boycotts, shares have started to rebound, in large part due to their undervalued nature. In the past five sessions, BUD gained nearly 6% of equity value.
On the other hand, POWW stock, while benefitting positively from conservative sentiments, is down nearly 38% over the past 365 days. During Ammo’s earnings disclosure for its fiscal fourth quarter, management mentioned inflationary and recessionary drivers impacting its consumers. Again, while Ammo beat Q4 expectations, revenue slipped nearly 38% on a year-over-year basis.
Ultimately, conservative consumers can get very passionate about their core ideological issues, which may create short-term trading opportunities. However, sustaining that passion can be problematic, especially when factoring in broader economic headwinds.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
