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Harley-Davidson (NYSE:HOG) is quietly testing the waters for a major shake-up. The company is exploring a potential sale of its financial services arm, HDFS, which could bring in over $1 billion. It's early daysno final call yetbut Harley's already working with advisers to field interest from regional banks, private equity firms, and credit players. The move comes at a time when Harley is under pressure to reset. With CEO Jochen Zeitz stepping down and competition from Honda and BMW heating up, the timing suggests a broader strategy shift is underway.
The stock market isn't exactly thrilled. Shares tumbled 9.3% on Thursday, closing at $21.49 and dragging Harley's market cap down to just $2.7 billion. That's a 48% nosedive over the past year. Investors are clearly losing patience. Zeitz's departure wraps up a five-year run marked by transformation efforts that haven't delivered the spark Harley hoped for. A sale of HDFS, which generated $248 million in operating income on $1 billion in revenue last year, could free up cash and attention for Harley to double down on its core businessor accelerate its push into electric with LiveWire.
For context, HDFS isn't just a back-office functionit's a revenue engine, making up roughly 20% of total sales. It finances everything from dealer inventory to individual motorcycles, and even works with third parties on insurance. If Harley pulls the trigger, the divestment could unlock value and buy time to reset its brand with a new CEO at the helm. But with HOG stock at multi-year lows, investors will need more than a breakup planthey'll want a turnaround roadmap that actually rides.
This article first appeared on GuruFocus.