HOG - Will Inflation Crush Harley-Davidson's Chances of Living High on the Hog?
The share price of Harley-Davidson (NYSE: HOG) went into a skid last Wednesday following its second-quarter 2021 earnings report and conference call, plunging 7.19% by market close. Despite many positives in the motorcycle maker's metrics, investors zeroed in on its higher raw material and supply chain costs, bidding its stock value down on fears of further inflation. The stock continued to fall for several days but more slowly.
With Harley-Davidson's Hardwire strategy to reforge itself into a more modern, profitable company underway, alarm over a potential stall might appear justified at first glance. But there are also enough signs of a turnaround to potentially support a more bullish viewpoint.
Increasing prices of steel and aluminum commodities, chip shortages, and supply chain problems are all having an effect on Harley-Davidson's operations, with the ongoing European tariff battle stacking onto these other factors. During the Q2 earnings conference call , CFO Gina Goetter said the supply chain is "very fragile" while noting the company "continued to see inflation across all modes of freight as well as within raw materials," a situation Harley's analysts expect to continue and worsen through 2021.
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Will Inflation Crush Harley-Davidson's Chances of Living High on the Hog?