Shares of Smith & Wesson stock fell by $2 at the end of trading Monday after the U.S. Army rejected the company’s bid to replace the M9 service pistol.
Price per share fell from $27.56 to $25.53 and remained under the $26 mark throughout trading on Tuesday.
The military contract has an estimated value of $580 million, but Smith & Wesson, which has been reporting positive results for the past few years, never included it in its financial guidelines, according to the company’s filing with the Securities and Exchange Commission.
“We are assessing our options in response to the notification and remain focused on achieving our long-term strategy of organically and inorganically expanding our product offerings in the consumer market for shooting, hunting, and rugged outdoor enthusiasts,” said Jeffrey Buchanan, Smith & Wesson’s chief financial officer.
Smith & Wesson announced its bid for the Modular Handgun Competition in November 2014. In that same timeline acquired Battenfeld Technologies and later transformed it into an accessory division as part of a longterm plan to expand as an outdoor brand.
And the plan, in large part, has been working. Smith & Wesson ended its fiscal year for 2016 by beating out projected revenue for accessories by $15.3 million and increased sales overall by 31 percent. More recently, Smith & Wesson ended its first quarter in September with a 40 percent increase in earnings.
As for the handgun competition, the Defense Department said in June it had plans to narrow the list of participants — Smith & Wesson, Beretta, FN, Glock and Sig Sauer — by the third quarter, according to reports. However, it’s unclear which companies remain as Smith & Wesson was one of two that announced its participation.