Honda Motor stock price in focus amid Nissan merger rumors: is it a buy?

Honda Motor is a leading Japanese company that manufactures some of the best-known products globally. It is a popular brand in the automobile sector, where it sells millions of vehicles a year.

Honda Motor is also a top manufacturer of motorcycles that are used globally. Its other products are its power solutions like generators, marine solutions, and even planes. The company is known for the quality of its products, with its cars being rated high in the form of their reliability. 

Honda Motor has been going through a rough patch, which explains why the stock has crashed by over 36% from its highest level this year. This slowdown is mostly because of its Chinese business, which has been disrupted by local car brands like Nio, BYD, and Li Auto. 

Honda Motor stock was trading at $23.56 on Thursday as its HypeIndex metric rose to 137%. 

Learn more about the HMC stock here.

Positive hype

• Honda Motor’s positive hype rose after it was reported that it was in talks to deepen ties with Nissan, a move that may lead to an eventual merger. Such a deal would create one of the biggest companies that sells almost 7 million cars annually. 

• The deal would also make it the third-biggest automaker in terms of vehicle sales after Toyota and Volkswagen.

• The two companies already have a partnership that has seen them build electric vehicles. A potential outcome for the ongoing talks is a situation where the two will create a single EV company that they will own.

• Honda Motor is benefiting from the weaker Japanese yen, which may continue falling now that the Bank of Japan did not hike rates. A weaker yen helps it boost its exports and receive more money from its overseas operations.

• The company published encouraging results for the six months between April and September. Its revenue rose to 10.9 trillion, while its operating profit rose to 742 billion yen.

• Honda is still known for its quality products, meaning that its business will see strong performance over time.

Negative hype

• Honda Motor stock remains in a deep bear market after falling by over 36% from its highest level this year. 

• The company is losing substantial market share in countries like China and the United States. Today, China has become the biggest vehicle-exporting country globally.

• It is unclear whether merging with Nissan will be a good thing since the latter is a weaker company. Historically, most M&A deals don’t work as advertised.

• The company is facing intense competition from companies like Toyota, Mazda, and General Motors.

Summary on Honda stock

The weekly chart shows that the Honda Motor stock price has been in a strong bearish trend in the past few months. It recently crashed below the key support level at $30.45, its highest swing in June 2021.

The stock has also moved below the 50-week and 200-week Exponential Moving Averages, while the MACD and the Relative Strength Index (RSI) have pointed downwards. It has also moved below the key support at $27.23, its lowest swing in June.

Therefore, there is a likelihood that the stock will continue falling as sellers target the next key support level at $20.

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HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.