Why investors positively assessed the Harley-Davidson report
Last week, the motorcycle manufacturer Harley—Davidson Inc. (HOG) stock received a positive impulse and was worth $37.81 at the auction on July 29. Investors positively accepted the quarterly report in which the company showed profit growth. Harley-Davidson’s revenue is still declining due to well-known brand development problems.
The future of electric motorcycles under this brand also remains uncertain. Harley-Davidson’s revenue decreased by 4% in the past quarter to about $1.47 billion. However, earnings rose almost 5% to $216 million, or $1.46 per share. Both indicators exceeded Wall Street expectations. Many investors also expected worse hands since, in May 2022, the company announced the suspension of production of most models of its motorcycles for two weeks.
The reason was vague: Harley-Davidson referred to the need to comply with specific regulatory requirements. Nevertheless, this pause did not lead to a revision of forecasts, and Harley-Davidson still expects revenue growth of 5-10% by the end of the year, but at the same time with a decrease in operating margin by 11-12% due to continuing problems with supply chains and increased prices for raw materials.
In general, the management of Harley-Davidson is now waiting for the stabilization of indicators after inflationary fluctuations in 2021. Thus, the report reassured some investors that Harley-Davidson still retains a large sales volume and can even improve profitability in the foreseeable future. However, declining Harley-Davidson sales is a common trend for most motorcycle manufacturers — young people are less interested in such two-wheeled vehicles than previous generations of consumers. So far, this is a fundamental problem for Harley-Davidson, and it will still have to in the next decade.
