The recent behavior of Honda’s stock has been almost theatrical. The shares closed at 1,251 yen on the Tokyo Stock Exchange on Monday, down 1.42 percent in a session that felt more like a slow shrug than a sell-off. Less than a year ago, the 52-week high of 1,730 yen seemed like a relic from a different company.
And it does, in certain respects. Honda is getting ready to report what appears to be its first operating loss since going public in 1957. An incredible run of profitability has now been cut short by an EV strategy that, to be honest, fell apart more quickly than anyone in Tokyo wanted to acknowledge. The company’s quiet decision earlier this year to scrap three planned EV models, including the Honda 0 SUV and the Acura RSX, is followed by the estimated loss of about 400 billion yen, or roughly 2.55 billion dollars. As the press releases mount, it is difficult to avoid feeling as though the company is torn between its old combustion engine certainty and an unfulfilled battery future.
It appears that investors are pricing in the worst. On paper, the stock appears to be the kind of deal that long-term value investors discreetly accumulate while everyone else freaks out, with a modest P/E ratio of 10.26 and a dividend yield hovering above 5.5%. The tone is almost perfectly captured in a thread on Reddit’s r/ValueInvesting, where one commenter describes it as tempting and another cautions against doing business with automakers. Strangely, both sound correct.
The cars themselves continue to roll off in consistent quantities outside of Honda’s Sayama plant, where production lines have been discreetly recalibrated multiple times this year. Motorcycle sales in Asia, especially in Vietnam and India, continue to be a persistent source of revenue for the business. Exporters like Honda have found an unexpected ally in the weaker yen that has plagued Japanese consumers. By March 2027, this combination—modest motorcycles and currency tailwinds—may serve as the cornerstone of the company’s previously promised recovery.
Canada comes next. First announced with such political fanfare in April 2024, Honda’s purported withdrawal from the Ontario battery-and-EV project has become a minor scandal in Ottawa and a significant signal for shareholders. The silence that follows a multibillion-dollar commitment by a company of Honda’s caliber is louder than any earnings announcement. It appears that management is reevaluating not only the locations of Honda’s auto factories but also the company’s goals for the next ten years.
The narrative takes on a different form in Pakistan. Honda Atlas Cars (Pakistan) Limited, which is currently trading at 230.39 rupees on the PSX, has lost about 16% so far this year, reflecting both its own local pressures, such as declining auto demand and currency volatility, and some of the parent company’s difficulties. The motorcycle division, Atlas Honda, presents a healthier narrative that once more reflects the worldwide trend: two wheels are good, four wheels are complicated.
The outcome of Honda’s full-year earnings and management strategy announcement on May 14 will probably be more significant than the actual loss. Investors aren’t really questioning Honda’s viability. They want to know what it will turn into. Honda is now trying to see if it has the same patience, capital discipline, and, to be honest, nerve as Toyota, which overcame its operating loss in 2008. Whether the market will reward that patience is still up in the air. However, someone is silently purchasing at 1,251 yen.