Some things need no introduction, and among the companies deeply embedded within the cultures of developed and non-developed nations would be the trusty Toyota. Founded in Japan in 1937, Toyota evolved to become one of the world’s largest automobile manufacturers, and the largest by sales. In fact, it’s only surpassed by the trendy Tesla in market capitalization.
Toyota produces nearly 10 million cars a year, establishing itself as a pioneer in the automotive market for decades. Yet, contemporary times have been damped with virus resurgence, supply shortages, rising inflation and a deteriorating macroeconomy as a whole.
In 2022, Toyota was tainted with a 27% drop in its value, which may seem dismal but is in fact quite impressive. To put this into scale, the grim & ambiguous macroeconomic conditions slashed nearly half of the value of some automotive giants in 2022. Tesla lost 44% in stock price, GM’s value was wiped by 47%, Volkswagen stumbled 33%, and the list goes on.
Despite underachieving quarterly results, Toyota remained sturdy in the headwinds of this year, caused by macropolitical turmoil which birthed vicious inflationary pressures, shooting energy prices and reduced consumer & investor expenditure.
On August 4th, Toyota released the quarterly figures for the first fiscal quarter of 2023, which were predominantly negative. Sales revenue of 8.49 trillion yen ($58.2 billion), generated from the sales of its electrified suite of vehicles and traditional flagship cars, is monumental. On a year-to-year basis, this represents growth of 555 billion yen, equating to a little under $4 billion.
Yet, nearly all other metrics were deemed unsatisfactory in the eyes of investors & traders. Toyota’s profits collapsed 42% due to high supply constraints, accelerating costs, production bottlenecks and COVID-induced lockdowns in Shanghai.
Month after month, Toyota cut its output goals amid the global semiconductor shortage and the resurgence of the coronavirus in China. Semiconductor chips represent an integral driver of efficiency & performance in electric vehicles; a realm which is no stranger to Toyota.
How did this reflect on the Toyota stock?
Toyota’s stock listed on the New York Stock Exchange (NYSE: TM) exhibits very negative short- and long-term trends, and is trading by the lower area of its yearly range. Currently priced at $138, the stock is trading between a support level by $130 and two resistance levels; $140 for the short term, and around $152 for the medium term.
Yet, the liquid Toyota stock outperforms the majority of the 34 stocks in the automobiles industry, and is a medium performer in the overall stock market scene. But, since its trajectory is visibly negative, it’s best to await a more suitable time for stock purchase.
While the Japanese car behemoth was hit hard this year after a relentless surge in 2021, Toyota remains as the 7th most valuable brand in Asia, and the 42nd largest company in the world, and its projections for the imminent future are very promising.
Toyota expects to bolster its profit structure and investor returns, proving to the world that it remains to be the force which competitors fear and consumers adore. For decades, Japanese innovation & efficiency has conquered the markets, and Toyota may once again steal the spotlight in the coming months.
Written by Alpho, Experienced online broker