Anybody having common shares of Toyota Motors may think they are purchasing to be a “contrarian” with all of the allegations flying around with respect to their accelerator pedal and perceived safety issues of cars. Looking at a 5-year stock chart, one might think they are catching the lows (currently $77/share)…
… but what really is the upside to an investor? I recall during the ramp-up in oil prices and the downfall of GM and Chrysler (2007-2008) that analysts were jumping all over themselves to compliment Toyota and implying the company is destined to greatness.
Auto manufacturing, at least at the low end consumer market, is a very competitive business and margins are very tight. When companies like Toyota have to end up recalling millions of vehicles because of a politically-motivated examination of perceived safety flaws of their vehicles (I am of the opinion that it is far more likely that for most part the company did not design a ‘flawed’ vehicle), it will affect their market capitalization far more than the recent 15% haircut their stock has taken. They are more likely to head down than up.
I have written this without doing a shred of financial analysis on the company – Toyota stock is being psychologically valued at this time by the marketplace, not financially.