Wall Street Swoon Reeling in Auto-Related Stocks

Wall Street Swoon Reeling in Auto-Related Stocks

By Michelle Krebs May 20, 2010

After a year-long run that saw auto-industry stock prices balloon from historic lows, the market retreat of the past several weeks has caused some give-backs on those exponential gains.

Ford Motor Co. stock had been in a dead sprint over the past year and in mid-March was trading at $13.40 per share - a price Ford shareholders hadn't enjoyed since 2004. But the price has retreated twice this month by nearly 20 percent, leaving some market watchers to wonder Ford is being dragged down in general or whether its stock price had become too overheated, particularly when considering the company's still-considerable debt load.

Stock in Toyota Motor Corp. dipped on the New York Stock Exchange to just more than $71, its lowest point in a year, in February when Toyota was grappling with the unintended acceleration issue and widespread negative publicity alleging slipping quality. The stock rebounded within a month, however, after the company weathered the related scrutiny. But Toyota's stock has dived again more than 10 percent and was trading around $75 this week.

Honda Motor Co. Ltd. stock is off more than 15 percent from a year-long high of almost $37 per share reached in January. This despite Honda's rapid reversal of revenue and profit declines and reporting a 2009 fiscal-year profit of $2.9 billion.

And some auto-industry suppliers that had racked up enormous gains off of remarkable depths reached at the worst of the recession have given back, too. Dana Holding Corp., whose stock price had dropped to less than 25 cents in early 2009, leapt almost to $14 at the beginning of May, but retreated in the past week to less than $11 per share. That price still represents an exponential gain over its 2009 low, however.

The trajectory is similar for other suppliers such as Arvin Meritor, which dropped to 45 cents in 2009 and shot to almost $17 earlier this month, only to retreat almost 20 percent in the market's latest correction.

BorgWarner Inc. dropped to nearly $15 in early 2009 and rebounded $44 per share in late April, but also has plunged nearly 20 percent in recent weeks, trading near $35 per share. - Bill Visnic, Senior Editor

 

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.