Quote:
Originally Posted by kork13
But I don't see that as the case here, so the drops are a bit surprising. Stockholders seem to be spooked for some reason -- perhaps did Toyota's history lull them into complacency?
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Well, I read that part of the problem is that Toyota tried to grow too big too fast. Of course, this is all in retrospect because when you think about it, who wouldn't try to grow their business? But in order to grow their international business, including here in the US, they've had to contract out a lot of parts. That in itself wasn't a bad idea either, but perhaps in all this complex international growth and contracting, they were not able to ensure their usual level of quality.
The other thing I speculate is that I think few would have suspected that something like this could happen to a company like Toyota. I suppose that makes it more newsworthy than if GM recalled one of their vehicles.
So, I really do think that there is a certain level of media hype heaped on top of a legitimate but temporary problem. However, EEinNJ did point out to yet another issue that I'll have to look into. If there is more to it, and if its systemic enough, it could change the playing field.
Nonetheless, this story is at least worth following because it stands out as a potential
Salad Oil moment (where Warren Buffett bought a company that was beaten down by the market for simply having proximity to a scandal, but was in itself a fundamentally sound business). However, I don't think we'll see a 50% fire sale in this case. I think this one will swing more around the 10%-15% range, either way.