AMMO Inc (POWW) an ammunition manufacturer, reported a nearly 30% rise in the stock price of $5.42 in the January 12 trading session. Three hundred forty million dollars were the market capitalization of the company. Why did the small-cap company’s stock go up in price?
A significant contributor to AMMO’s growth was the announcement that the company expects its revenue to grow by 317% in the fourth quarter of the fiscal year 2021. While the third-quarter report has yet to be published, sales are expected to grow by 500%. Despite the relatively small quarterly revenue, around $20 million, investors have been thrilled with strong triple-digit growth. A 293% increase in the company’s revenue is expected in the fiscal year ending 2021.
It is unusual for AMMO Inc (POWW) to publish forecasts for two quarters at a time, especially considering the company has never focused on industry publications. The good news is that, like many other manufacturers of arms and ammunition, AMMO also finds itself in a favorable situation in 2020.
AMMO offers all popular calibres in the USA, including subsonic ammunition for use with a silencer and special purpose ammunition with improved accuracy. The company also offers an exclusive line of tracer bullets, STREAKs. These bullets are made from luminescent paint, rather than burning tracers.
Several factors, including the coronavirus pandemic, unrest, and the US presidential election, have contributed to an increase in weapons demand. This trend will likely continue in 2021, albeit less so.
As a result, AMMO Inc (POWW) will increase sales by producing quality products. Nevertheless, any long-term investors should consider the possible risks to the cartridge manufacturer.