Harley-Davidson's Q4 Loss Widens Amid Tariff Pressure and Weak Retail, Confirming 2026 as Transition Year

What happened

Harley-Davidson reported a wider Q4 loss with revenues down 28%, driven by increased tariffs and declining retail sales. The company is continuing consumer promotions into 2026 to clear touring inventory, which pressures gross margins and reflects persistent demand weakness. Tariffs contributed approximately $45 million in costs during the first nine months of 2025, adding to profitability challenges without clear near-term relief. For 2026, HDMC operating income is guided between -$40 million and +$10 million, while HDFS resets to a lower earnings base of $45–$60 million due to structural changes in its financing model. The May 2026 strategic plan update is a critical catalyst, where management must detail at least $150 million in annual savings to offset these headwinds and restore investor confidence.

Implication

The confirmed weak Q4 performance and cautious 2026 outlook reinforce the need for patience, aligning with the DeepValue report's WAIT rating. Promotions and tariffs will continue to compress margins in the near term, limiting upside potential until touring inventory clears without broader discounting. The reset of HDFS earnings reduces consolidated profitability, making 2026 an earnings trough that challenges valuation support. Without clear progress on touring inventory clearance and cost savings, downside risks to the bear scenario increase, potentially driving the stock toward the $18 attractive entry level. Entry opportunities may improve below $18 if operational improvements falter, but any investment should await evidence from the May 2026 catalyst.

Thesis delta

The Q4 results and 2026 outlook confirm the DeepValue thesis that Harley-Davidson is in a transitional year with significant headwinds from tariffs, promotions, and HDFS reset. No material shift in the investment call is warranted, but the news reinforces the urgency of monitoring the May 2026 plan for cost-saving specifics and inventory progress.