Four weeks from now, on November 5, voters will determine what direction our great country will take over the next four years.
While not all of the bills coming out of Washington, D.C., are stock market-related, the economic proposals ultimately implemented by the incoming president and Congress will help shape the landscape for American businesses in the future. coming years.
Current Vice President and Democratic Party presidential candidate Kamala Harris has proposed sweeping changes designed to reduce food and drug costs, expand a variety of tax credits 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 prosper with Harris in the White House, other high-flying companies may struggle.
What follows are three of the most influential stocks on Wall Street that could plummet if Kamala Harris wins in November.
Metaplatforms
The first highly influential company that could struggle if Harris emerges victorious in November is the social media behemoth. Metaplatforms (NASDAQ: META)the parent company of Facebook, Instagram and WhatsApp, among other social sites.
Meta stands at the top of the pedestal when it comes to social media websites. For the quarter ended in June, it attracted 3.27 billion daily active users on its family apps. No other social platform comes close to generating this level of daily views, which is what gives Meta exceptional ad pricing power in most cases.
The concern for Meta is the possibility that Harris and his administration will pursue monopoly-type companies. In an interview with CNN while running for the Democratic presidential nomination in 2019, Harris suggested she wanted to “take a serious look” at the company’s breakup and alluded that Meta (formerly known as Facebook) was “essentially a utility that has been has deregulated.”
It is true that the political opinions of elected officials can and do change over time. It’s unclear whether Harris still believes Mark Zuckerberg’s company needs stricter regulations designed to protect consumer privacy interests. However, his 2019 comments point to the very real possibility of pitting the Harris administration against some of Wall Street’s most dominant firms.
The other reason Meta Platforms could struggle if Harris wins in November is its aforementioned plan to increase the corporate tax rate by a third: from 21% to 28%. Although Meta is quite profitable thanks to its advertising operations, a higher tax rate would expose the growing losses it faces in its Reality Labs segment. This is the operating division focused on virtual/augmented reality devices and the company’s metaverse ambitions. company, among other projects.
While a higher corporate tax rate has historically been positive for the benchmark S&P 500this might not be the case for meta platforms.
Nordisk
A second market-leading company that could face major difficulties if Kamala Harris wins in four weeks is the Danish pharmaceutical company. Nordisk (NYSE: NVO).
Novo Nordisk became famous thanks to its successful duo of glucagon-like peptide 1 (GLP-1) injectable drugs, Ozempic and Wegovy. Ozempic is approved as a treatment for type 2 diabetes and for long-term weight management, while Wegovy is a weight management therapy for patients with at least one weight-related condition, such as type 2 diabetes, high cholesterol or high blood pressure. GLP-1 drugs are Big Pharma’s first prescription weight loss breakthrough in quite some time.
However, Harris has made reducing prescription drug costs a key issue of her campaign. While the administration of Joe Biden and Kamala Harris praised Eli Lilly to reduce the cost of the GLP-1 drug Zepbound in August, other GLP-1 drug makers have been asked to follow suit.
Novo Nordisk does not seem willing to heed that call. The company’s CEO, Lars Jorgensen, defended his company’s position before a US Senate committee in September of charging $1,349 (retail) for a 28-day supply of Wegovy and $968 (retail). 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 drive the company’s massive earnings multiple: 27 times next year’s earnings.
The uncertainty surrounding national drug prices and what Harris could accomplish in the Oval Office could be enough to halt what has been nothing short of a parabolic upward move for Novo Nordisk over the past three years.
Apple
The third highly influential stock that could plummet if Kamala Harris wins in November is none other than Wall Street’s largest publicly traded company by market capitalization. Apple (NASDAQ:AAPL). Interestingly, this is a company that could also struggle if Donald Trump wins.
Apple is best known for being a dominant force in technology products, such as the iPhone, iPad, and Mac. But most of the company’s growth right now can be traced back to its Services segment. CEO Tim Cook is overseeing a multi-year transformation that emphasizes the importance of subscription services. Ideally, a subscription-driven model should improve the company’s operating margin over time and smooth out the revenue valleys that often occur during iPhone upgrade cycles.
But Apple could face a double whammy if Harris wins and is able to implement the full scope of his economic proposals.
For starters, raising the corporate tax rate by 33% would potentially leave Apple with less capital to funnel into share buybacks. No public company has benefited more directly from share buybacks than Apple.
Since the beginning of 2013, Apple has repurchased $700.6 billion in common stock, helping to boost its earnings per share (EPS) from what would be less than $4 in fiscal 2024 (ending September 30, 2024) if it had never repurchased its shares, at a consensus estimate of $6.68 per share in the current fiscal year. Without significant buybacks, Apple’s stagnant growth engine would be exposed.
Additionally, Kamala Harris has proposed taxing unrealized capital gains. Although this tax focuses strictly on people with net wealth over $100 million, many of the wealthiest taxpayers likely have a stake, directly or through exchange-traded funds, in Wall Street’s largest company by market capitalization.
Whether it’s Donald Trump’s proposed 60% tariff on imports from China or Harris’ plan to raise taxes on the ultra-wealthy and corporations, there’s a real chance Apple could lose out on November 5.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sean Williams has positions at Meta Platforms. The Motley Fool has positions and recommends Apple and Meta Platforms. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Prediction: 3 of Wall Street’s Most Influential Stocks Could Sink if Kamala Harris Wins in November originally published by The Motley Fool