Nissan stock drops after surge on Honda deal news
Nissan faces losses as investors take profits
Nissan Motor Co.’s stock took a hit on Monday, falling as much as 6.7%, bringing the two-day drop to an anticipated 13%.
Investors are cashing out after the Japanese carmaker’s recent surge, which was driven by the announcement of a potential deal with its stronger industry peer, Honda Motor Co. Since December 17, Nissan shares had skyrocketed by over 60%, spurred by excitement over the planned partnership, before retreating sharply on December 27 as investor sentiment shifted toward the deal's specifics, reports Bloomberg.
On December 23, Nissan and Honda revealed plans to form a joint holding company by August 2026, with the exact details still pending. A report by Nikkei on December 27 suggested the share transfer ratio between Honda and Nissan could be as low as 5:1, which disappointed some investors hoping for a more favourable outcome for Nissan.
Kazuhiro Sasaki, head of research at Phillip Securities Japan, noted that investor disappointment may have fuelled the selling, as many had hoped for a more advantageous share swap for Nissan.
Investor sentiment and long-term outlook
Despite the temporary boost from the Honda news, Nissan's financial struggles remain a concern for investors. Steven Holden, founder of Copley Fund Research, pointed out that global funds have low positions in Nissan, and sentiment remains largely negative.
"There’s very little positive activity around Nissan," Holden said, adding that global funds are shifting focus away from carmakers and toward big tech in 2025. Nissan’s challenges in regaining investor confidence could keep its stock under pressure.
Broader market trends and impact on Nissan
The broader Japanese stock market also experienced profit-taking on Monday, with the Topix index falling by 0.8%. Carmakers, including Nissan, were among the worst performers on the blue-chip Nikkei 225 index, highlighting broader concerns within the sector.
Additionally, Honda Motor Co. Ltd. shares soared 13.55% in Tokyo trading on Dec. 24, their biggest one-day gain since 2008.
