As the 2024 U.S. presidential election approaches, Wall Street is closely watching how the outcome could affect the financial landscape, particularly for some of the largest companies in the world. With current Vice President Kamala Harris running as the Democratic nominee, her proposed economic policies are raising concerns for several market-leading businesses. If elected on November 5, her administration’s plans could pose significant challenges to companies like Meta Platforms, Novo Nordisk, and Apple.
The Impact of Harris’s Corporate Tax Plans
One of the most significant components of Harris’s economic proposal is a plan to raise the corporate tax rate from 21% to 28%, an increase of 33%. This move, while intended to help reduce the federal deficit and provide tax relief for middle-class families, could have far-reaching consequences for some of the most prominent companies on Wall Street.
For businesses like Meta Platforms, this higher tax rate could expose vulnerabilities within their less profitable divisions. Even though Meta is highly profitable in its core advertising business, its Reality Labs segment, focused on virtual and augmented reality, continues to operate at a loss. The increased corporate tax could exacerbate these losses and make it harder for the company to maintain its dominance.
Meta Platforms Could Face Regulatory Pressure
Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, is one of the most influential businesses in the world, with over 3.27 billion daily active users. However, if Harris is elected, Meta may face more than just financial challenges. During her 2019 presidential campaign, Harris expressed interest in examining whether large tech companies, like Meta, were acting as monopolies that should be broken up.
While it’s unclear whether Harris still holds this view, the possibility of stronger regulations targeting Meta’s monopoly-like status remains. If these regulations materialize, Meta could be forced to change its business practices significantly, which may affect its future growth and profitability.
Prescription Drug Costs Could Weigh Down Novo Nordisk
Another company that could face challenges under a Harris administration is Novo Nordisk, the Danish pharmaceutical giant known for its popular GLP-1 drugs, Ozempic and Wegovy. These drugs have been game-changers for treating type 2 diabetes and weight-related conditions, but they come with a hefty price tag.
Harris has made it clear that lowering prescription drug costs is a priority for her administration. Her campaign has called on drugmakers to follow the lead of Eli Lilly, which reduced the cost of a similar medication. Novo Nordisk, however, has shown little interest in reducing the price of its treatments, which could lead to increased scrutiny from a Harris-led government. Given that much of Novo Nordisk’s future earnings are tied to Ozempic, any regulatory actions that limit the company’s pricing power could negatively impact its stock performance.
Apple Could See Reduced Share Buybacks
Apple, the world’s largest publicly traded company by market capitalization, is also at risk of being affected by Harris’s tax policies. The proposed corporate tax increase would likely leave the tech giant with less capital to allocate towards its massive share buyback programs. Apple has repurchased over $700 billion worth of its stock since 2013, significantly boosting its earnings per share (EPS). A reduction in buybacks could slow this growth and expose the company’s reliance on stock repurchases to enhance its financial performance.
In addition to the corporate tax increase, Harris has also proposed taxing unrealized capital gains for individuals with net wealth over $100 million. This move could indirectly affect Apple by reducing the wealth of many of its largest shareholders, potentially decreasing demand for the company’s stock.
Uncertainty for Businesses and Investors
As the election nears, uncertainty looms for these major companies. While the outcome of the election will undoubtedly shape the future of corporate America, companies like Meta, Novo Nordisk, and Apple are preparing for a range of potential challenges should Kamala Harris emerge victorious.
If Harris is successful, her proposed policies could reshape the regulatory and financial landscape for years to come. Investors and businesses alike will need to keep a close watch on how these developments unfold, as the results of the November 5 election may significantly impact the trajectory of some of Wall Street’s most powerful companies.
