Harley-Davidson (NYSE:HOG) was in a precarious position before the coronavirus pandemic hit in the spring of 2020. And the pandemic hasn't helped business in the least. 

Not only was production shut down because of COVID-19, but Harley-Davidson may also see full-year demand fall even further than it has in previous years. High unemployment isn't likely to put consumers in the mood to spend on a consumer discretionary device like a motorcycle, and that slower spending could last for a while. 

Person riding motorcycle on an open highway

Image source: Getty Images.

Where Harley-Davidson's business is trending

Over the last five years, Harley-Davidson's business has been steadily deteriorating, primarily because motorcycle sales have fallen in the U.S. You can see below that revenue is down 12%, but net income has dropped 53% over that time. 

HOG Revenue (TTM) Chart

HOG Revenue (TTM) data by YCharts

This decline has happened as the economy has grown and wages have risen, which should be perfect operating conditions for a motorcycle company. But consumers aren't buying motorcycles in the numbers they used to and Harley-Davidson has failed to attract young buyers with new products like the all-electric LiveWire motorcycle

There's no easy answer to fix this problem, either. Consumers are trending toward ridesharing and electric vehicles, which are the opposite of Harley-Davidson's loud, gas-powered brand. The pandemic will likely make a bad business even worse. 

Why hasn't the market freaked out? 

Looking at Harley-Davidson's stock price, you may think the company's stock had a response similar to a lot of stocks on the market. And that's true. Shares have recovered a lot of their March losses and are down about 31% on the year. 

HOG Chart

HOG data by YCharts

But the impact will be long-lasting given the tens of millions of people who have lost their jobs during the pandemic. And Harley-Davidson hasn't done anything to fundamentally change the direction of its business. Traditional motorcycles are still the company's bread and butter, and electric motorcycles don't seem to be a product the company is getting right from a design and marketing perspective. What's left is a slow deterioration of the business. 

Harley-Davidson has some time

At the end of the first quarter of 2020, Harley-Davidson had $1.47 billion of cash on the balance sheet, and management is cutting costs to get through the pandemic. But my problem with buying the stock now isn't the next few months or quarters, it's Harley-Davidson three to five years from now. I don't see consumers, particularly young people, suddenly getting interested in motorcycles again. And there doesn't seem to be a product the company can transition to adapt to that reality. 

Pandemic or no pandemic, I don't think Harley-Davidson's business is prepared for the new reality in its market. And while the company has enough cash to last for a while, management has layered on $8.1 billion of debt, which makes the company very risky long term if it can't generate a profit. 

HOG Financial Debt (Quarterly) Chart

HOG Financial Debt (Quarterly) data by YCharts

This isn't a stock I'm buying today, and I'm putting a red thumb on shares in My CAPS. The future doesn't look bright in the motorcycle business.