American motorcycle manufacturer stock price took another hit yesterday losing another 4% in value and the American stock prices falling for the third consecutive day which leave HOG some $20 short of it’s all year high of $51.77
Why is this relevant? Well in recent weeks there has been some interesting trading of HOG stocks and some big numbers changing hands. Whilst there has been investment in the brand which has been delivering higher dividends in recent times, there have also been some notable withdraws too with a banking investor selling its complete stake in Harley Davidson only last week.
Are we merely witnessing the peaks and troughs of the stock market or is this more indicative of an overvalued, overhyped and overly promoted stock which is now showing signs of faltering in the current economic climate.
Across the entire automotive sector, new vehicle sales have been hit as potential buyers hold off on big ticket purchases, whilst used prices have also risen which in turn has also made buyers hesitate too.
Harley Davidson as a brand have been much criticised in some quarters for claiming to provide a premium product and charging prices to match. However when there is a disconnect with the perceived value of a product or indeed a brand…and the economic realities that many people are facing around the globe, it is unsurprising that unit sale are affected.
Harley Davidson stock has risen tremendously over the last year due to higher profit margins even on declining unit sales, as well as greater profits on other commercial activities, however it did not take into account the mood of the customer base for 2023, who are seeing things a little differently.
Stock analysts have been buoyant for HOG for some months now…seeing the stock price rise has given them greater confidence that the company is doing well. But that just shows a lack of understanding of the motorcycle business and the Harley Davidson fan base who may love the brand and still perceive them as an aspirational brand but current finances mean they are turning their attentions elsewhere.
Supporters of the brand have been quick to dismiss any detractors by quoting how well the company is doing and merely quoting the stock price rise, but also failing to dig deeper to understanding the perils of selling high price items in a market that is fast becoming shy to spend.
The big question is not how well the company is doing based upon last year’s results but moreover how are they performing now and how will they continue throughout 2023? In this current economic environment, the rules of commerce can be stretched and once inflated bubbles can burst. Will the stock price recover or will it continue to be hit by investor withdraw and a market that finally reflects all the variables that can adversely affect the brand.