Harley-Davidson’s stock (NYSE: HOG) has declined around 30% since the beginning of the year. The automotive industry is rattled, and Harley-Davidson is no exception. A Covid recession will impact the company’s revenues, cash flows, and ability to pay dividends. Fading consumer demand, reduced discretionary spending, and stay-at-home orders, will result in minimal demand for heavyweight motorcycles. With the car rental industry’s Hertz filing for bankruptcy protection, it shows the situation of the automotive industry. While a bankruptcy doesn’t necessarily mean a company going out of business, it can also include massive financial restructuring..
Trefis analyzes the potential Impact Of The Covid-19 Recession On Harley-Davidson with a focus on the company’s liquidity reserves and concludes that Harley-Davidson has a steady financial position and a Covid-19 recession will not have a major impact on the company’s cash reserves in the near term.
Impact On Harley-Davidson’s Revenues
- If the outbreak of the virus increases, Harley-Davidson’s demand will be low until the situation improves. As a result, Harley-Davidson’s revenues could decline by about 30% in FY’20, on account of weaker demand, potential supply constraints, and a reduction in discretionary spending.
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