SHORT BYRNA (BYRN)

Byrna Technologies Inc. (“BYRN”, “Byrna”) provides non-lethal launcher alternatives to firearms (think air pistols or paint ball guns). Byrna sells its launchers direct to consumers (“DTC”) via its website, Amazon store, as well as through its third-party dealer network of Premier (“Premier Dealer”) and Authorized Dealers (“Authorized Dealers”).

Our analysis of Byrna’s primary sales channels question the accuracy of its purported sales growth, purported profitability and claimed consumer interest.

1. Overstated Premier Dealership Count: Byrna disclosed it had twenty (20) “Premier Dealers.” However, we reviewed Byrna’s “Authorized Dealers” list and found only twelve (12) “Premier Dealers” listed, not twenty (20). We found that Byrna’s “Premier Dealers” included secondary businesses using ad-hoc shooting ranges in garages and back alleys with little/no retail presence.

We called 17 different dealers which represented more than 20% of Byrna’s “Authorized Dealer” locations. We found multiple ”Authorized Dealers” with no online presence nor independent retail storefronts, including a car wash, a tea shop, a uniform embroidery shop, and a barbershop. We found that Byrna’s “Authorized Dealer” list included storefronts that did not carry launchers in stock and had not placed a restocking order in the last 90 days.

A Coastal Country salesperson (top 5 dealer store count) told us “we didn’t get enough movement off the product… it looks like they are actually discontinued across all of our Coastal stores… None of our Coastal stores show inventory on hand for any of the Byrna actual units… 2022 was the last time we got any… My guess is they’re not going to be anywhere in our company… we didn’t make enough on them.”

2. Stagnant Google Search and Amazon Sales Trends: Amazon sales growth and Google trends growth suggested stagnant growth for Byrna’s DTC business. On April 10, 2024 and September 20, 2024, we reviewed Amazon sales data for each of Byrna’s listed products and we estimate Amazon sales growth somewhere between ~5-10%. Google Trends revealed flat growth in the past 12 months for “Byrna” website keyword search.

3. Increased Competition at Lower Prices: We found many highly rated competitors offered at significantly lower prices which, to us, suggests headwinds for Byrna’s future sales growth and profitability. We think that Byrna’s “technology” patents do not provide protection for its launcher design considering the number of workarounds used by competing product offerings.

4. Insider Sales Immediately After Buyback & Preannouncement; CFO Turnover: If DTC is so good, why is management selling stock? In September 2024, Byrna insiders sold stock in the open market immediately after BYRN used 33% of its buyback program and immediately after BYRN preannounced revenue upside which sent BYRN shares up 50+%. Additionally, BYRN’s CFO retired in July 2024 and replaced with a historically unsuccessful candidate.

To us, Byrna’s purported figures don’t add up. If Byrna’s DTC strategy was so successful, why focus on car washes, teas shops, barber shops, garages and back alleys? We are short BYRN and think its stock is going lower.