TSLA - Toyota: Several Red Flags Beyond Safety Scandal

2024-06-21 06:21:45 ET

Summary

• The recent safety scandal highlights significant deficiencies in Toyota's internal controls, and it is not the only fundamental reason to sell the stock.
• There are several indicators that Toyota is too slow in adapting to the rapidly evolving automotive industry, where EVs are gaining momentum.
• The valuation also does not look attractive, prompting me to reiterate a 'Sell' rating for Toyota's stock.

Investment thesis

My previous bearish thesis about Toyota Motor Corporation ( TOYOF ) aged somewhat well because the stock significantly lagged behind the S&P 500 since September 2023. On the other hand, the stock delivered a modest 5.6% return to shareholders, which is definitely not bad....

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