RH CEO Dismisses Trump Tariffs, But Wall Street Isn’t Buying It – Stock Heads For Largest Single-Day Drop On Record
Bank of America double downgraded RH stock’s rating to ‘Underperform’ from ‘Buy’ and slashed its price target to $130 from $410.
FollowRH (RH) CEO Gary Friedman downplayed the impact of Trump administration tariffs on the home-furnishings retailer, telling investors he doesn’t believe they will “stick.”
However, Wall Street had a different reaction – sending RH stock plummeting 37% in afternoon trade on Wednesday, its worst single-day drop on record.
“The reality is, I don’t think these tariffs are going to completely stick,” Friedman said on the company’s fourth-quarter (Q4) earnings call. “Leverage is how you win negotiations, not bluffing. If you’re these other countries, you’re going to start playing the few cards you have.”
Friedman’s remarks came just hours after President Donald Trump announced sweeping tariff hikes, including a 25% duty on auto imports and a minimum 10% tariff on all U.S. trading partners. Chinese goods face the steepest increase, now subject to a 54% total levy.
The S&P 500 fell 3.1% following the news.
While Friedman remained confident that RH could work with its suppliers to mitigate the impact of tariffs, analysts were far less optimistic. Wall Street swiftly downgraded the stock, citing added uncertainty to an already struggling company.
Bank of America (BofA) cut RH’s rating to ‘Underperform’ from ‘Buy’ and slashed its price target to $130 from $410, warning that tariffs create major risks for inventory sourcing, margins, and overall demand.
The brokerage also cautioned that RH’s fiscal 2025 revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) guidance could be “unachievable.”
Meanwhile, Guggenheim lowered its price target on the stock to $300 from $500, though it maintained a ‘Buy’ rating. The brokerage estimates that Trump’s reciprocal tariffs could raise RH’s product costs by as much as 35%, making near-term sales and margin projections highly uncertain.
RH’s selloff came amid a broader market decline, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all dipping lower. While Friedman insists the company can navigate trade tensions, Wall Street’s reaction suggests investors aren’t convinced.
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