Harley-Davidson's Stock Price: Cheap But With Reason for Skepticism

Harley-Davidson, an American icon, is struggling to maintain its status due to declining sales and market share. Despite being a cheap stock, the company's financial struggles are a concern. Harley-Davidson's revenue has declined for the past four years, and its market share has been eroded by foreign competitors. The company is shifting its focus to electric motorcycles, but its efforts have yet to bear fruit.

Harley-Davidson, an American icon, has long been synonymous with freedom and rebellion, but the company is now grappling with significant financial challenges. Despite its storied history and iconic brand, Harley-Davidson has seen its revenue decline for the past four years, with market share eroded by foreign competitors. The company's stock price, currently trading at $23.56, is at a five-year low, and its financial struggles are a growing concern for investors [1].

Harley-Davidson's core business, the manufacture and sale of heavyweight motorcycles, has faced a steep decline. In Q1 2025, the company's total revenue fell by 23% year-over-year, with significant drops in sales across its major markets, including North America, Asia-Pacific, and EMEA. The company's motorcycle segment, Harley-Davidson Motor Company (HDMC), saw a 15% drop in sales in 2024, particularly in the large cruiser segment [1].

The company's shift towards electric motorcycles, embodied by its LiveWire division, has yet to yield substantial results. LiveWire's shipments cratered by 54% in 2024, with a 32% drop in revenue, though the operating loss narrowed to $26 million from $35 million, indicating progress [1]. However, the electric motorcycle market remains highly competitive, with players like Zero Motorcycles and Tesla posing significant threats.

Harley-Davidson's financial health is further complicated by its exposure to tariffs and economic uncertainty. The company has withdrawn its 2025 financial guidance due to economic uncertainty and looming tariff impacts estimated at $130–175 million [1]. The company's balance sheet remains solid, with $1.59 billion in cash and long-term debt reduced to $4.47 billion, but its high probability of financial hardship in the near term raises caution [1].

Despite these challenges, Harley-Davidson's stock appears undervalued, trading at a price-to-book ratio of 0.97 and a price-to-earnings growth ratio of 1.07. The stock's dividend yield of 2.95% is above the bottom 25% of U.S. dividend payers but below the top 25% of its sector [1]. The company's dividend policy and $1 billion share buyback program could provide support for investors, but the company's financial struggles and competitive pressures remain significant concerns.

In conclusion, Harley-Davidson's current financial situation is a cause for concern. While the stock may present an opportunity for value investors, the company's declining revenue, market share, and exposure to economic uncertainties pose significant risks. Investors should approach Harley-Davidson's stock with caution and a well-thought-out investment strategy.

References:
[1] https://www.aipt.lt/harley-davidson-stock-at-23-56-screaming-buy-or-tariff-trap/