In a recent article from Simply Wall St, it was suggested that Harley Davidson success could be determined by the investing enthusiasm of major investors whose mood could change to protect their own interests.
I for one have looked at Harley Davidson quite closely over a number of years and have tried to set aside my admiration for the brand or the love of my own motorcycle that was produced by them, to determine how rosey is the wine in Milwaukee?
There are many supporters of the brand who will mock anyone who questions the strength and depth of the iconic motorcycle manufacturer. They will tell you how well the company is doing. How high the stock price is. They are the best motorcycle company…however it is undeniable that the brand is producing ever increasingly costly motorcycles out of the financial reach of most would be riders…and this is reflected in reducing sales in recent years.
Stock analysts will laud at how well the company is performing and what the projections are but they fail to understand that premium brands need premium customers too. Whilst the company has moved away from the average Joe towards white collar William, nobody is immune from riding prices that deter people from spending money on big ticket items.
The company just released its 1st quarter numbers for 2023 and across the board there were positive signs but there were some heavy losses in certain areas such as credit losses in HDFS and of course their EV spinoff: LiveWire!
However the stock market seemed to be rather buoyant with the motorcycles shipped numbers which was an improvement on the previous year. But shipped does not mean sales! And with reducing sales from previous years, rising costs and ever costly bikes…you wonder where are the sales going to be for the coming year?
This is where the big investors are looking right now. They are wondering whether a near 10% fall in investor returns means they will be inclined to retain their investment in the company. If these large investors…which account for over 80% of the company decide to move their money elsewhere, this could cause a snowball effect that could be more than a little concerning for the company.
Whilst this could be seen as doomsday prophecy, if one were to look at the cross section of reports, analytics and financial commentary over the last few months, there have been whispering questions about the true health of the company and whether the ever increasing unit price of their products are conducive with profitable sales returns.
The market has already identified that the company does not have to sell as many units in order to increase its profits, but how long before the bubble bursts? How long before the major investors turn tail and take their money elsewhere? How long can a company like Harley-Davidson continue to sell big ticket items to a customer base with changing attitudes and wallet sizes?