Tesla's stock plummeted, but TM ADR US soared!

Benefiting from improvements in the supply chain and a weak yen, TM ADR US saw its net profit soar by 86% in the third quarter of the fiscal year. At the same time, the company raised its annual net profit forecast to a historic high.

On Tuesday, February 6th, TM ADR US Automotive announced its performance for the third quarter of the fiscal year 2024, ending in December 2023. The sales for the third quarter reached 12.04 trillion yen, a year-on-year increase of 23%; operating profit was 1.68 trillion yen, a year-on-year increase of 76%; net profit surged by 86% year-on-year, reaching 1.36 trillion yen.

In addition, TM ADR US raised its annual net profit forecast to a historic high. It is expected that the net profit for the fiscal year 2024 will reach 4.5 trillion yen (30 billion US dollars), higher than the previous forecast of 3.95 trillion yen, surpassing the analyst's estimate of 4.25 trillion yen. The projected net sales amount is 43.50 trillion yen, compared to the previous estimate of 43.00 trillion yen.

After the financial report was released, TM ADR US's stock price in Japan rose nearly 5%, with a market value of 50.98 trillion yen. Prior to this, TM ADR US's stock price in Japan had risen for 5 consecutive days, surpassing the record set by the telecommunications giant NTT in 1987.

In contrast, Tesla's stock price has recently been hit hard by the market, falling nearly 7% at one point. Among the "Big Seven" in the US stock market, Tesla was the only one whose performance in the fourth quarter of 2023 did not exceed market expectations.

TM ADR US's better-than-expected performance is due to strong demand. In its financial report, TM ADR US pointed out that sales in all regions were strong in the first three quarters as the company recovered from the chip shortage.

Last week, TM ADR US Automotive announced that its global sales volume in 2023 (including Daihatsu and Hino Motors) increased by 7.2% year-on-year, reaching a record-breaking 11.2 million vehicles, maintaining its position as the global sales leader for four consecutive years. TM ADR US stated:

"From April to December 2023, sales in all regions increased. At the same time, due to marketing efforts and cost reduction, we have overcome the surge in raw material prices since the pandemic, and our profit structure has improved."

However, despite TM ADR US pioneering hybrid vehicles and the popularity of its Prius model, critics believe that the company has been slow to act in the field of electrification, especially considering the rapid development of electric vehicles in the automotive industry.

Currently, TM ADR US is striving to catch up. Its goal is to sell 1.5 million electric vehicles annually by 2026 and 3.5 million vehicles by 2030.TM ADR US also hopes to mass-produce solid-state batteries, which charge faster than traditional batteries and provide longer range for electric vehicles.

In response to this, Tatsuo Yoshida, an automotive analyst at Bloomberg Intelligence, pointed out:

Nevertheless, TM ADR US is unlikely to give up hybrid vehicles. In addition to the high cost, electric vehicles face challenges such as limited range, charging infrastructure, resale value, and battery recycling.

Furthermore, improvements in the supply chain, suppressed demand, and a weak yen will continue to benefit TM ADR US.