Daily Stock Market News

Why Investors Slammed the Brakes on Toyota Stock Today


Investors in auto companies always fear news of product recalls, since the subsequent hit to a manufacturer’s reputation can ding the price of its stock. That’s what happened on Friday with Japanese automaker Toyota Motor (NYSE: TM), as a market sell-off followed the announcement of its latest recall.

By market close today, the company’s shares had lost 3.5% of their value; investors would have been better off simply tracking the S&P 500 index, which slipped by only 0.1%.

A 42,000-strong recall

This morning, the National Highway Traffic Safety Administration (NHTSA) published a press release on recent news that Toyota is recalling more than 42,000 2023 and 2024 Corolla Cross hybrids it sold in the ever-influential U.S. market. The concern is about a loss in power brake assist; in certain instances, this can lengthen the distance needed to come to a complete stop.

The NHTSA said it detected a software error in the unit that prevents the vehicle from skidding. That error could trigger the brake assist flaw when negotiating a corner.

Toyota has pledged to update and correct the software’s programming through its network of dealerships. That modification will be made free of charge.

No one enjoys flaws in auto manufacturing

Toyota added that the owners of all affected vehicles will be formally notified of the recall by late November. While recalls are a fact of life in the auto industry, to the point where they are expected to a degree, they always raise concern about an automaker’s production and quality control.

Toyota will surely motor past this one, and hopefully for its investors it’ll be tighter as it travels down the road.

Should you invest $1,000 in Toyota Motor right now?

Before you buy stock in Toyota Motor, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Toyota Motor wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $760,130!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 23, 2024

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Investors Slammed the Brakes on Toyota Stock Today was originally published by The Motley Fool



Read More: Why Investors Slammed the Brakes on Toyota Stock Today

You might also like