Four weeks from today, on November 5, voters will determine the direction our great country will take over the next four years.
Although every bill that comes out of Washington, D.C., has no impact on the stock market, the economic proposals that the next president and ultimately Congress put forward will help shape the landscape for corporate America in the years ahead.
Current Vice President and Democratic Party presidential nominee, Kamala Harris, has proposed sweeping changes aimed at lowering food and drug costs, expanding a variety of tax breaks for middle-class families, and wants to reduce the federal deficit by… Raising the corporate tax rate by 33%.
While some companies are likely to thrive with Harris in the White House, other successful companies may face difficulties.
Here are three of the most influential stocks on Wall Street that could fall if Kamala Harris wins in November.
Meta platforms
The first highly influential company that could find difficulty if Harris proves victorious in November is Social media giant Meta platforms (NASDAQ:META)the parent company of Facebook, Instagram, and WhatsApp, among other social media sites.
Meta is at the top of the pedestal when it comes to social media sites. In the quarter ended June, it attracted 3.27 billion daily active users across its family apps. No other social platform comes close to generating this level of daily traffic, which often provides Meta with exceptional ad pricing power.
What worries Meta is the possibility that Harris and her administration will go after monopolies like corporations. In an interview with CNN while running for the Democratic presidential nomination in 2019, Harris indicated that she wanted to “take a hard look” at breaking up the company, and implied that Meta (formerly known as Facebook) was “essentially a utility that went unregulated.”
Of course, the political views of elected officials can change over time. It’s not clear whether Harris still believes Mark Zuckerberg’s company needs stronger regulations designed to protect consumer privacy interests. However, her statements in 2019 suggest the very real possibility of pitting the Harris administration against some of Wall Street’s most dominant firms.
Another reason Meta Platforms could suffer if Harris wins in November is her aforementioned plan to raise the corporate tax rate by a third – from 21% to 28%. Although Meta is very profitable from its advertising operations, a higher tax rate would expose the increasing losses it incurs from its Reality Labs segment. This is the operating division that focuses on augmented/virtual reality hardware and the company’s ambitions, among other projects.
While the rise in the corporate tax rate has historically been positive for the index Standard & Poor’s 500This may not be the case for Meta platforms.
Novo Nordisk
The second market leader that could struggle hard if Kamala Harris wins in four weeks is a Denmark-based pharmaceutical company Novo Nordisk (NYSE: NFU).
Novo Nordisk has found its way into the spotlight thanks to its blockbuster duo of injectable glucagon-like peptide-1 (GLP-1) drugs, Ozempic and Wegovy. Ozempic is approved as a treatment for type 2 diabetes and a long-term weight management treatment, while Wegovy is a weight management treatment for patients with at least one weight-related condition, such as type 2 diabetes, high cholesterol, or high blood pressure. . GLP-1 drugs are the first weight-loss medical breakthrough from Big Pharma in a long time.
However, Harris has made lowering prescription drug costs a major theme of her campaign. While the administration of Joe Biden and Kamala Harris praised it Eli Lilly To lower the cost of GLP-1 drug Zepbound in August, other GLP-1 drug makers were called on to follow suit.
Novo Nordisk doesn’t seem keen to heed that call. The company’s CEO, Lars Jorgensen, defended his company’s position before a US Senate committee in September by charging $1,349 (retail) for a 28-day supply of Wegovy and $968 (retail) for a 28-day supply of Ozempic. Novo Nordisk relies heavily on Ozempic to drive future earnings growth. Not to mention, Wall Street is counting on Ozempic to boost the company’s massive profits — 27 times next year’s earnings.
The uncertainty surrounding domestic drug pricing and what Harris will be able to accomplish in the Oval Office may be enough to halt what has been nothing short of a higher parabolic move for Novo Nordisk over the past three years.
apple
The third high-profile stock that could fall if Kamala Harris wins in November is none other than the largest publicly traded company on Wall Street by market cap. apple (Nasdaq: Apple). Interestingly, this company may also suffer if Donald Trump wins.
Apple is known for being a dominant force in technology products, such as the iPhone, iPad, and Mac. But the lion’s share of the company’s growth at the moment is due to the services sector. CEO Tim Cook is overseeing a multi-year transformation that emphasizes the importance of subscription services. Ideally, a subscription-based model should improve the company’s operating margin over time and mitigate the revenue decline that often occurs during iPhone upgrade cycles.
But Apple could face a double blow if Harris wins and is able to implement the full scope of her economic proposals.
First of all, raising the corporate tax rate by 33% would likely leave Apple with less capital to direct toward stock buybacks. No public company has benefited more directly from stock buybacks than Apple.
Since the beginning of 2013, Apple has repurchased $700.6 billion worth of its common stock, helping to boost earnings per share (EPS) from what would have been less than $4 in fiscal 2024 (ending September 30, 2024) if it had never By repurchasing its shares, to a consensus estimate of $6.68 per share in the current fiscal year. Without significant buybacks, Apple’s stalled growth engine will be exposed.
In addition, Kamala Harris has proposed taxing unrealized capital gains. Although this tax is strictly focused on individuals with a net worth of more than $100 million, many of the richest taxpayers likely have a stake, directly or via exchange-traded funds, in the largest Wall Street company by value. Logistics.
Whether it’s Donald Trump’s proposed 60% tariff on imports from China or Harris’ plan to raise taxes on the wealthy and corporations, there’s a real possibility that Apple could emerge on the losing side on November 5.
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sean Williams He has positions on meta platforms. The Motley Fool has positions in and recommends the Apple and Meta platforms. The Motley Fool recommends Novo Nordisk. The Motley Fool has Disclosure policy.
Prediction: 3 of Wall Street’s most influential stocks could fall if Kamala Harris wins in November Originally published by The Motley Fool
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