Things were bad enough for luxury furniture manufacturer RH. The stock was down 67% from its 2021 all-time high and its business fundamentals have been deteriorating. Not to mention that a short report by Hunterbrook accused the company of “acquiring two private jets, a yacht, and a “personal penthouse” for the CEO“. Then came Trump’s “Liberation Day” and liberated RH investors from another 40% of their wealth in a single day on April 3rd.
The Restoration Hardware chain operator sources more than two-thirds of its products from Asia, with China and Vietnam accounting for more than half of that. Trump’s 54% and 46% tariffs on imports from these two countries, respectively, are all but guaranteed to make life very difficult for RH. In spite of all this, and with the stock down 62% this year already, we wonder if there’s light at the end of the tunnel. As far as Elliott Wave analysis is concerned, there might still be some hope for RH bulls after all.
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The daily chart of RH stock shows that the drop from $745 a share in 2021 can be labeled as a simple A-B-C zigzag. Wave B is an expanding triangle correction, marked (a)-(b)-(c)-(d)-(e), whose waves (c) and (d) are flat retracements. According to the theory, triangles, expanding or contracting, precede the final wave of the larger sequence. The final wave here must be the current selloff from $457 in wave C. If this count is correct, a notable bullish reversal can be expected once wave C is over. RH can easily fall by 50% more before finding bottom, though.
That being said, this bullish setup won’t come to fruition if the fundamental situation at RH doesn’t improve. Management has to navigate not only a slowing economy and punishing tariffs, but also the company’s own self-inflicted wounds. As of February 1st, 2025, RH has just over $30 million in cash against $100 million in current operating lease liabilities and nearly $2.4B in long-term debt. So the company has to be very careful not to find itself in a liquidity crisis, as well. We’ll first have to see some tangible signs of improving financial stability, before we can feel confident enough in this otherwise clear Elliott Wave setup.
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