Change Gonna Come: Is Harley Davidson Ready for it?
Financial analysts seem to agree that Harley is still a good investment.
There is no doubt Harley Davidson has been through quite a few big changes recently. Aside from serious supply chain issues brought on by the Covid pandemic, the Motor Company has spun off its electric bike business, alienated a big portion of its fan base by introducing radical changes to its products and, oh yeah, changed its CEO.
Even the future of the company’s Milwaukee headquarters is uncertain. All these head-spinning changes have some long-time loyalists wondering if the company is ready for whatever the financial future brings.
Well, fear not: The news isn’t all peachy keen, but Harley Davidson is actually doing well, with both its consumers and stockholders.
Crank It Up
In these times of high inflation and economic uncertainty, the Motor Company has been faring better than other automotive players in the minds of investors. HD stock had been rising about three percent year-to-date before the latest bit of good news.
Shares jumped 13 percent Wednesday after the company reported quarterly earnings were higher than expected. HD apparently has bounced back from a two-week production stoppage earlier this year, due to a parts problem with a supplier.
They cranked the motorcycle-making machines back up in early June, and global bike shipments grew 19 percent in the third quarter.
More Expensive Machines
Another promising trend is that revenue grew 24 percent during the same quarter. The reason that is promising is that the company’s revenue through the first seven months of the year was down drastically.
The Motor Company’s revenue has been falling in recent years, so making money has been an obvious key concern.
But, you can’t make money without selling and shipping a product, and it appears the Motor Company has started to recover from the parts and supply chain issues and has been beefing up both manufacturing and shipments. The company has also put more emphasis on selling more expensive machines.
‘They Love Me So Much’
Then there is LiveWire. Harley split its electric bike business into a separate publicly traded company earlier this year.
The idea was to combine the name, prestige and wads of cash of Harley Davidson, one of the best-known brands in the world, with a forward-looking, clean-energy company that would attract a younger generation that loved traveling on two wheels.
How’s it worked out? Mixed results thus far. LiveWire stock initially rose, before falling soon after. Since then, its stock has fluctuated. You don’t exactly see a ton of electric bike lovers crowding into Harley dealerships.
“I know, (the dealerships) love me so much,” Harley CEO Jochen Zeitz said sarcastically to Bloomberg recently. “Traditional trade is always very retro, let’s put it this way. They don’t like change. I take it as a compliment.”
Change Is Gonna’ Come
Then, there are all the mechanical changes the company has made to motorcycles long-loved by its traditionalist base. For example, liquid cooling, once considered ver boten by Harley riders, is now on several models.
Like cars, Harley Davidson motorcycles have become increasingly more dependent on high-tech gadgets. Younger riders notice, but many older riders and even independent Harley mechanics complain the new bikes are built for only the tech-savvy and no longer for the average garage mechanic.
This mix begs the question: Is the future bright or dark? Forbes, for one, says investors like what they see, mainly because of HD’s interest in selling high-end motorcycles. Good news for investors, maybe not so much for working stiffs.
“…Demand for pre-owned Harley bikes has (also) been strong, with prices on second-hand vehicles only slightly below new vehicles,” a Forbes analysis says. “This could be an indicator that the company will see relatively steady demand even in a tough macro environment.”
Photos: Harley Davidson
