What Happened?
Shares of american motorcycle manufacturing company Harley-Davidson (NYSE: HOG) fell 4.1% in the afternoon session after its Japanese unit was fined approximately 211 million yen, or $1.4 million, by the country's antitrust watchdog for imposing excessive sales quotas on dealers.
Japan's Fair Trade Commission also issued a cease-and-desist order, finding that the company pressured 38 major dealers with aggressive sales targets since at least early 2023. The company reportedly suggested it would not renew contracts for dealers who failed to meet the goals. This pressure forced some dealers to purchase and register new motorcycles themselves, only to sell them in the secondhand market just to make their numbers.
The shares closed the day at $28.32, down 4.8% from previous close.
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What Is The Market Telling Us
Harley-Davidson’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock dropped 3% on the news that markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading.
Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% the previous month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.
Harley-Davidson is down 3.8% since the beginning of the year, and at $28.32 per share, it is trading 28.4% below its 52-week high of $39.53 from September 2024. Investors who bought $1,000 worth of Harley-Davidson’s shares 5 years ago would now be looking at an investment worth $1,166.
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