RH (NYSE:RH) rode the lockdown phase of the pandemic to glory back in 2020, and a little beyond as well. Recently, however, it’s started sounding a much darker alarm, looking for a housing market collapse that will match 2008 in sheer ferocity. That didn’t stop RH stock from spiking over 5% in Friday’s trading, however.
A company that focuses mainly on furniture and housewares would certainly take notice of changes in the housing market. Current RH CEO, Gary Friedman, has never been shy about his outlook, either. That’s what makes this latest remark especially disturbing.
Friedman noted that there was “a lot of uncertainty right now,” which is quite true. However, Friedman went on to note that “the housing market is collapsing at a level I haven’t seen since 2008.” For anyone who remembers 2008, that’s a frightening notion.
RH’s latest earnings call two days ago knocked it out of the park. The company posted $5.63 per share in earnings against the $4.70 per share expected. A housing market collapse could be good for RH. It would ensure more customers stay in their homes as opposed to buying new ones.
Those customers then might augment their homes with the kind of things RH sells. However, the obvious risk is that no one cares about buying anything but absolute necessities in that situation.
In addition, other RH insiders don’t have much faith in the company’s ability to continue selling high-end home furnishings. Insiders sold $11.4 million worth of shares in the last three months. As a result, the insider confidence signal is Very Negative.
