Why Estee Lauder Stock Was Pulling Back Today

Shares of Estee Lauder (NYSE: EL) were among the losers today even as the broad market soared in response to former President Trump's victory.

Estee Lauder has struggled badly in recent quarters amid weakness in China, and today's sell-off seems to come in response to another potential trade war between the U.S. and China. Trump also campaigned on tariffs, which could cut into profits for a global company like Estee Lauder.

As a result, the cosmetics stock was down 3.9% as of 2:33 p.m. ET. That compared to a 2.5% decline in iShares MSCI China ETF, showing investors turning away from China stocks.

Image source: Getty Images.

Estee Lauder's problems continue

Estee Lauder stock is down sharply from its pandemic peak in large part due to its challenges in China, and the stock continued to get left behind today as investors shifted toward cyclical stocks like financials and energy, which are expected to do well in a Trump administration, and away from consumer staples like Estee Lauder.

Tariffs did weigh on the business in the first Trump administration, though CEO Fabrizio Freda attempted to tamp down concerns about tariffs back in 2018.

If Trump imposes tariffs this time around, China could respond in kind, leading to higher costs for Estee Lauder in two of its key markets.

Can Estee Lauder bounce back?

The cosmetics giant is down more than 80% from its pandemic-era peak, and the company continues to implement its recovery and growth plan.

Organic sales fell 5% in its fiscal first quarter. It slashed its dividend, and it pulled its fiscal 2025 guidance, reflecting challenges in China.

It won't be easy for the company to return to growth without a recovery in China, and a new tariff regime would only make that more difficult.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $22,469!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,271!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $411,970!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 4, 2024

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.