What Happened?
Shares of luxury furniture retailer RH (NYSE: RH) fell 4.8% in the morning session after the stock's negative momentum continued as President Donald Trump announced new tariffs targeting imported home furnishings.
The U.S. will impose a 30% tariff on upholstered furniture and a 50% tariff on bathroom and kitchen vanities, effective October 1. President Trump cited a “massive influx” of these products from foreign countries as the reason for the new measures. The announcement put pressure on import-reliant furniture retailers like RH. The company, formerly known as Restoration Hardware, sources a significant portion of its products from overseas, meaning the new tariffs could increase its costs and impact profitability.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy RH? Access our full analysis report here, it’s free.
What Is The Market Telling Us
RH’s shares are extremely volatile and have had 38 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 17 days ago when the stock dropped 4.6% on the news that the company reported disappointing second-quarter results and provided a weak outlook for the upcoming quarter.
While the company's revenue of $899.2 million was up 8.4% year-over-year and nearly in line with expectations, its profitability fell short. Adjusted earnings per share of $2.93 missed Wall Street's consensus estimate of $3.22. Furthermore, investors were concerned by the company's guidance for the third quarter. RH forecasted revenue of $884.8 million, which was roughly 2% below analysts' expectations, signaling slowing momentum ahead. The combination of the earnings miss and a softer-than-expected forecast drove the negative investor reaction.
RH is down 51% since the beginning of the year, and at $193.61 per share, it is trading 57.4% below its 52-week high of $454.52 from January 2025. Investors who bought $1,000 worth of RH’s shares 5 years ago would now be looking at an investment worth $515.84.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
