Episode summary
Harley Davidson Shares Soar on Captive Deal | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, John Tucker · Guests: Joel Levington, Jennifer Bartashus, Michael Halen, Steve Man
Summary
Harley-Davidson shares jumped after the company sold a minority stake in its captive finance arm to KKR and PIMCO at a better-than-expected price. The guest said the financing business is the real profit engine at Harley, generating more than half of overall profits, while the manufacturing side has deteriorated over time, with sales down 13% over 10 years and margins falling from about 20% to about 5%. He said the company will use $1.25 billion of proceeds for share purchases, debt reduction and capital investment.
Kraft Heinz posted a decent quarter by using pricing to offset volume pressure, but the guest said the business still needs a broader turnaround and is leaning on sauces, flavors and selective price increases. He said inflation and tariff effects are being spread across the supply chain, though consumers will likely see more of the impact in the second half of the year. The company is still exploring strategic options, but prior brand sales have been difficult.
Starbucks and Wingstop also showed how investors are parsing restaurant earnings for signs of resilience. Starbucks pointed to improving service, customer sentiment and new products like protein cold foam, while Wingstop’s better-than-expected unit growth and smaller sales slowdown supported the stock.
Tesla’s agreement to buy $4.3 billion of U.S.-built batteries from LG Energy Solution was framed as an energy-storage deal, not an EV battery supply deal. The guest said that business has 30% gross margins versus low-teens for cars, while EV demand may swing in the coming quarters as the $7,500 tax credit expires at the end of September.
Key takeaways
- Harley-Davidson’s financing unit is the core value driver, with the guest saying it produces more than half of Harley’s profits.
- The Harley stake sale to KKR and PIMCO should keep the company investment grade and give it $1.25 billion for buybacks, debt paydown and investment.
- Kraft Heinz is still relying on selective pricing and flavor innovation to protect margins as tariff costs work through the supply chain.
- Starbucks bulls are encouraged by better value perception, lower turnover and new products like protein cold foam.
- Tesla’s LG Energy Solution deal is about storage batteries, a business the guest said earns roughly 30% gross margins versus low-teens for cars.
Notable quotes
“the key for a Harley isn't really their earnings, which were really like not great, but the potential or not the potential, but a stake uh sale of their captive finance company”
“they've kind of lost their way a little bit”
“there's a little bit of a distribution across the whole supply chain and so everybody's taking a little bite of it”
How the episode opens
Bloomberg Audio Studios podcasts radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern — On Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube.
Let's talk Harley-Davidson. Now, John, you know I bought a ride recently. You did not buy a Harley. Let's just make that clear. — I bought a Vespa Pagio scooter. 50 cc's of raw power. — Oh, 50 C.
So when I, you know, when you're driving down the road and the and the guy on Harley-Davidson comes the other way, you know, I wave. They don't wave back. You know, I don't get the cool sign like you're a biker.
But you're not the Anyway, Joel Lemonson, he follows the the all the credit stuff for a lot of these uh industrial and transportation companies. He's a director of credit research for Bloomberg Intelligence. Uh Harley-Davidson stock is up 20% here.
What happened?
Paul, you're on the Vespa. I would think you'd be coming. Are you coming out of your Bentley while you do that or? — Yeah, I'm I'm Vespa on the Jersey Shore. You can find me any day.
That I believe. That I believe. Yeah.
You know, the key for a Harley isn't really their earnings, which were really like not great, but the potential or not the potential, but a stake uh sale of their captive finance company, which came in at a much higher price than people were expecting. That's going to be used or the proceeds are 1.25 25 billion with the proceeds used for a mix of share purchases, paying down debt, and also for capital investment.
Okay. So, when I go in to buy a Harley-Davidson motorcycle at the dealership, I finance it through this part of Harley.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- harley-davidson captive finance deal
- kraft heinz earnings
- starbucks earnings turnaround
- tesla battery supply deal
- retail staples and packaged food earnings
Companies and tickers mentioned
- HD
- KKR
- KHC
- SBUX
- TSLA
- Harley-Davidson
- KKR
- Pimco
- Kraft Heinz Co.
- Starbucks
- Tesla
- LG Energy Solution Ltd.
Watch the episode
Watch “Harley Davidson Shares Soar on Captive Deal | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Bloomberg Intelligence
-
Instant Reaction: Nvidia CEO Jensen Huang Ousted by Nvidia Board | Bloomberg Intelligence -
Nvidia’s Huang Ousted by Board in Move That Roils AI Economy | Bloomberg Intelligence -
CoreWeave Shares Soar After AI Computing Firm Eases Debt Fears | Bloomberg Intelligence -
Anthropic Targets $1.4 Trillion Valuation in Blockbuster IPO | Bloomberg Intelligence -
Nvidia Probe Into CEO Affair Raises Thorny Questions for AI | Bloomberg Intelligence -
Election 'Blue Wave' & Your Wallet; Navigating AI-Driven Market Volatility | Bloomberg Intelligence
Bloomberg Intelligence, this episode and its artwork belong to Bloomberg. Octagon is not affiliated with the show; this page is an independent summary.
