NSANY Down 26% in a Year: How Should Investors Approach the Stock Now?

Core Viewpoint - Nissan Motor Co. is experiencing significant challenges, including financial instability, declining sales, leadership uncertainty, and increased competition, particularly in the electric vehicle market [2][10]. Group 1: Financial Performance - Over the past 12 months, Nissan's shares have decreased by 26.4%, underperforming the Zacks Auto, Tires and Trucks sector's loss of 1.5% and the S&P 500 index's gain of 17.1% [1]. - In the first three quarters of 2024, global retail sales fell nearly 2% to 2.4 million units, with North America showing modest growth of 2.4%, while Japan and Europe saw declines [5]. - Nissan's debt is projected to reach a record level of $5.6 billion by 2026, impacting its ability to invest in new technologies [6]. - The company reported an auto-free cash flow deficit of JPY 506 billion, straining its liquidity [6]. - The Zacks Consensus Estimate for Nissan's fourth-quarter 2024 revenues is $20.53 billion, indicating a year-over-year decline of 13.24% [14]. Group 2: Product and Market Position - Nissan's product lineup is considered outdated compared to competitors like Toyota and emerging Chinese EV manufacturers, leading to heavy discounts and incentives to maintain sales [7][8]. - Despite being an early pioneer in EVs with the Nissan Leaf, the company has failed to capitalize on its initial lead, allowing competitors to dominate the market [9]. Group 3: Leadership and Strategic Challenges - Leadership instability is evident, with CEO Makoto Uchida facing pressure to resign amid poor performance [10]. - Nissan's attempts to explore a merger with Honda Motor Co. were unsuccessful due to disputes over terms, and a three-party MoU with Honda and Mitsubishi was canceled [11]. - Renault has indicated it may reduce its stake in Nissan, further isolating the company [11]. Group 4: Outlook and Restructuring Efforts - Nissan has cut its full-year outlook three times in fiscal 2024, with a 20% reduction in operating profit guidance [12]. - The company plans to restructure its cost base by reducing its workforce by 5,300 in fiscal 2025 and an additional 1,200 in fiscal 2026, along with closing three plants [13].