Why Did HP Stock Plunge 10%? Tariffs, Earnings Miss

On May 29, 2025, HP's stock experienced a significant drop of 10% in pre-market trading, reflecting a challenging period for the company.

HP has revised its annual profit forecast for fiscal 2025, now expecting adjusted profit to be between $3.00 and $3.30 per share, down from the previous forecast of $3.45 to $3.75 per share. This adjustment comes as tariffs continue to weigh heavily on demand, impacting the company's financial outlook.

In the first quarter of 2025, HP reported better-than-expected revenue, with sales increasing by 3.3% year over year to $13.22 billion. However, despite the positive revenue figures, the stock price has continued to decline, indicating investor concerns over the company's ability to navigate the current economic challenges.

HP's CEO, Enrique Lores, has acknowledged that tariff charges have been higher and more widespread than initially anticipated. As a result, the company has accelerated its production shift out of China to mitigate the impact of these tariffs on its operations and financial performance.

In the second quarter of 2025, HP reported earnings of $0.71 per share, missing the consensus estimate of $0.80 per share. This earnings miss, combined with the revised profit outlook, has contributed to the recent decline in the company's stock price.

Looking ahead, HP's CEO has indicated that the company may implement targeted price increases to offset the rising costs associated with tariffs. However, the effectiveness of this strategy remains to be seen, as the company continues to face headwinds from both economic and regulatory challenges.