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Nissan share prices drop after earnings forecast slash, now back on the rise

After the announcement Tuesday that the company was cutting its earning estimates, stock dropped more than 10%, but has since seen recovery.


When Nissan announced management shakeups after profit projections were slashed, the Tokyo market on Tuesday reacted with a near-immediate drop in share price for the company. The drop totaled about 10.40 percent for the day.

Slowly, after trading opened Wednesday, the stock began to rise again and today, after another 2.4 percent climb from yesterday, it is close to recovered from the losses. Bloomberg now reports a rise of 2.79 percent day-to-day and a 29.11 percent return for the year on Nissan shares.

This comes as Carlos Ghosn, Nissan's CEO, announced that the changes in management and near-completion of planned expenditures on manufacturing and sales expansion will keep the company on track for its aggressive market percentage and sales goals for the long term. Regarding the management changes, Ghosn said "Everyone understands the company needs to rejuvenate itself." The restructuring at Nissan is similar to that of Renault, the Japanese automaker's alliance partner and of which Ghosn is also CEO. Renault owns controlling shares (40 percent) of Nissan.

The drop in expected income came after Nissan announced it would show a net profit of 355 billion yen ($3.62 billion USD) for the fiscal year rather than the projected 420 billion yen. Losses came due to lackluster gains in Europe as economics turn against automakers there and costly recalls the company has suffered this year.

All of these losses come despite sales growth of 14.7 percent year-on-year and profit growth of 6.5 percent for the first half year over last year.