Blackstone stock price retreated sharply as investors reacted to a major warning from Donald Trump on barring institutional investors from buying residential properties. It dropped to a low of $147, down from this week’s high of $163. So, will Trump’s ban have a major negative impact on the company?
Will Donald Trump’s residential housing ban affect Blackstone?
In a Truth Social post on Wednesday, Trump said that he would soon ban institutional investors from acquiring residential properties in the United States, a move aimed at addressing soaring prices.
Blackstone, the biggest owner of these properties, will be one of the most affected companies if the proposal becomes law. That’s because the company has been acquiring projects, a move that has made it own thousands of houses in the country.
For example, the company acquired Home Partners of America in a $6 billion deal that gave it 17,000 rentals. It also bought Tricon Residential in a $3.5 billion deal that gave it over 38,000 homes.
Still, an executive order to ban these transactions will likely be met with legal actions by some of the biggest companies in the industry. Also, it is unclear whether the House of Representatives and the Senate will codify such a bill into law.
Besides, the private equity has a long history of hiring some of the best lobbyists in the United States, which explains why Congress has resisted passing a law to end the carried interest loophole.
Even if the bill passes, it is unclear whether the US government will force Blackstone to liquidate its property portfolio. Also, as with any laws, chances are that it will have some loopholes.
Therefore, the most likely scenario is where the company continues doing well over time as its business is much bigger and the residential real estate is a much smaller part.
BX faces numerous tailwinds and headwinds ahead
Fundamentally, Blackstone has numerous headwinds and tailwinds ahead. One of the main tailwind is that corporate activity will likely continue growing this year as interest rates start falling and as the impact of Donald Trump’s tariffs start fading.
As a result, the impact of Trump’s deregulation will be felt this year, a move that may lead to more mergers and acquisitions (M&A) and dealmaking in the country.
The company’s private equity business will also benefit from the potential Federal Reserve interest rate cuts, which are expected to move lower in the coming months.
Blackstone will also likely continue attracting more cash from investors. The most recent results showed that its inflows soared by $54.2 billion in the third quarter, bringing its fee-earning AUM to over $906.2 billion. This growth brought its assets under management to over $1.24 trillion.
Analysts are also bullish on the stock, with the average estimate being at $179, up by 17% from the current level. Some of the most bullish analysts are from companies like Deutsche Bank and BMO Capital Markets.
The main headwind, however, is that lower interest rates may lead to lower margins in its fast-growing private credit business whose fee-earning AUM has $432 billion in AUM.
Blackstone stock price technical analysis
The three-day chart shows that the Blackstone share price has remained under pressure in the past few months, moving from a high of $194.27 in November 2024 to the current $153.60.
It is consolidating at the 50-day and 100-day Exponential Moving Averages (EMA). Most importantly, it has slowly formed a large symmetrical triangle pattern whose two lines are about to converge.
The stock’s Supertrend indicator has also turned green for the first time in months. Therefore, the most likely scenario is where the stock remains under pressure ahead of Trump’s speech on the residential market at Davos. It will then rebound to the psychological level at $200 later this year.
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