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Nissan Shares Plummet Amid Concerns Over Honda Deal Terms

Nissan dealership with empty lots and overcast skies.

Nissan Motor Co. is facing significant pressure on its stock prices, with shares sliding nearly 13% over two days due to investor concerns regarding the terms of its planned joint venture with Honda Motor Co. The deal, which aims to establish a joint holding company by August 2026, has raised questions about the share transfer ratio, leading to a sell-off in Nissan’s stock.

Key Takeaways

  • Nissan shares fell as much as 6.7% in Tokyo, marking a two-day decline of 13%.
  • Investor disappointment over the proposed share ratio in the Honda-Nissan deal has triggered selling.
  • The joint holding company is set to be established by August 2026, but exact terms are still undecided.
  • Broader market trends show profit-taking among investors, impacting Nissan’s stock performance.

Investor Concerns Over Share Ratio

The recent decline in Nissan’s stock can be attributed to concerns about the share transfer ratio in the upcoming Honda-Nissan joint venture. A report from Nikkei suggested a ratio of 5:1, which has disappointed investors who were hoping for a more favorable arrangement for Nissan. Kazuhiro Sasaki, head of research at Phillip Securities Japan, noted that this disappointment may have led to increased selling pressure on Nissan shares.

Market Reaction and Profit-Taking

On the last trading day of the year, Nissan’s stock was particularly vulnerable to profit-taking, following a significant rise of over 60% since mid-December. Investors appeared to be adjusting their positions ahead of the year-end, leading to a sell-off in Nissan shares. The broader Japanese stock market also experienced profit-taking, with the Topix index declining by 0.8% as investors took a step back after five consecutive days of gains.

Broader Implications for Nissan

Despite the initial boost in share prices following the announcement of the Honda deal, the long-term outlook for Nissan remains uncertain. Steven Holden, founder of Copley Fund Research, highlighted that global fund positioning in Nissan is low, indicating a lack of positive sentiment around the automaker. He noted that Nissan is likely to be one of the significant losers in the ongoing trend of investors shifting focus from traditional automakers to technology companies.

Conclusion

As Nissan navigates the complexities of its planned joint venture with Honda, investor sentiment remains cautious. The uncertainty surrounding the share transfer ratio and the company’s financial health continues to weigh on its stock performance. With the automotive industry facing significant shifts, Nissan’s ability to adapt and regain investor confidence will be crucial in the coming months.

Sources

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