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Harley-Davidson's Narrow Board Re-Election: A Cautionary Tale for Investors

Philip CarterThursday, May 15, 2025 8:33 am ET

17min read

Harley-Davidson’s recent shareholder meeting marked a pivotal moment of reckoning for the iconic American motorcycle company. While the board narrowly retained its seats, the results exposed deepening investor skepticism about leadership, strategy, and the company’s ability to navigate existential threats. With weak fundamentals, escalating operational challenges, and an uncertain path under new leadership, investors should proceed with caution. Here’s why a sell or hold stance remains prudent until tangible turnaround signs emerge.

The Re-Election Results: A Pyrrhic Victory

Harley’s board re-election underscored a stark divide between entrenched leadership and frustrated shareholders. CEO Jochen Zeitz, Presiding Director Tom Linebarger, and Sara Levinson survived their seats with 48%, 44%, and 44% withhold votes, respectively—a historic rebuke for a company long shielded from activist pressure. The vote followed a brutal campaign by H Partners, a 9.3% shareholder, which accused the board of “arrogant, insular thinking” and demanded immediate leadership overhaul.

While the board retained its structure, it caved to key demands: Zeitz and his allies will resign by 2026, and an external CEO will replace Zeitz, who plans to retire this year. Yet, this compromise offers little comfort. The new CEO’s vision remains a mystery, and the board’s concessions—made under duress—highlight a lack of unity and strategic clarity.

The Fundamentals Are Broken

Beyond governance battles, Harley’s operational struggles paint a dire picture:
1. Sales Collapse: Motorcycle shipments plummeted 33% in Q1 2025 to 386,000 units, with North American sales—the company’s cash cow—down 24%. Global retail sales fell 21%, signaling a loss of brand relevance.
2. LiveWire’s Disappointment: The EV division, once touted as Harley’s future, sold just 33 motorcycles in Q1—a 72% drop—while net losses grew to $19.3M. Its STACYC e-bike sales also collapsed, underscoring poor execution in the fast-growing EV market.
3. Tariff Headwinds: New U.S. tariffs could add $130–$175M in annual costs, squeezing margins further. With dealer inventories swelling to 56,000 units, write-down risks loom.

Why the Leadership Transition Won’t Save Harley (Yet)

While replacing Zeitz offers hope, the path to recovery is littered with obstacles:
- Brand Relevance: Harley’s “premium” Hardwire strategy has failed to halt sales declines. Younger riders are abandoning the brand for cheaper, electric alternatives, while older customers face rising interest rates and economic uncertainty.
- LiveWire’s Existential Crisis: With cumulative losses exceeding $245M, LiveWire’s viability hinges on unproven markets and costly product launches. Its recent $1.03 stock price—a 84% drop from 2024 highs—reflects investor despair.
- Leadership Vacuum: The new CEO’s identity and vision remain unknown. Without a credible plan to revive core sales, cut costs, and turn LiveWire around, confidence will remain elusive.

The Case for Caution: Sell or Hold Until Proof

Harley’s stock trades near its 52-week low of $20.45, offering tempting valuations. However, the risks far outweigh the rewards:
- Execution Risks: Even a new CEO faces insurmountable challenges: reversing declining sales, repairing dealer relations, and revitalizing LiveWire—all while tariffs and supply chains smother profitability.
- Weak Financials: With net income down 43% in Q1 and a $130–$175M tariff overhang, Harley’s balance sheet is stretched. Share repurchases ($87M in Q1) may do more harm than good if cash reserves dwindle.
- Unclear Turnaround Timeline: Without financial guidance and with LiveWire’s losses compounding, investors lack visibility. A “wait and see” approach is rational here.

Final Call: Hold or Sell—Avoid Overcommitting

Harley-Davidson is a company in crisis, not turnaround mode. While governance changes offer a sliver of hope, the fundamentals—crumbling sales, LiveWire’s failures, and tariff-driven costs—are too dire to ignore.

Recommendation:
- Sell: If you own shares, take profits or cut losses. Harley’s stock is volatile and lacks catalysts to climb sustainably.
- Hold: If you must stay invested, set strict price targets and exit if LiveWire’s losses deepen or core sales decline further.

Only when Harley delivers a credible sales rebound, LiveWire achieves profitability, or the new CEO outlines a clear path to growth should investors reconsider. Until then, this iconic brand remains a cautionary tale of legacy industries struggling to adapt.

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