Hyundai Motor (005380.KS) has fallen for five straight sessions, dropping to less than half its high for the year. Production losses from a labor union strike and a stronger won have darkened the earnings outlook, while fading expectations for its robotics and self-driving businesses have added to uncertainty over any recovery in the stock.
Hyundai Motor closed at 313,500 won on Oct. 14, down 0.48%, according to the Korea Exchange on the 15th. The stock has declined for five consecutive sessions since Oct. 7, falling 9.91% from its Oct. 6 close of 348,000 won. Over the same period, the KOSPI fell 13.43%, and Hyundai Motor failed to rebound, extending its weakness.
The decline is even starker compared with June, when the stock hit its high for the year. On June 1, Hyundai Motor climbed to 783,000 won during the session and closed at 750,000 won. Its market capitalization, which then reached 153.5683 trillion won ($107.7 billion), had shrunk to 63.7867 trillion won as of Oct. 14. That is a drop of about 89.7816 trillion won in just over four months. The share price fell 58.20% over the same period.
Its ranking by market value has slipped as well. In the first half of this year, Hyundai Motor passed 100 trillion won in market capitalization on expectations for Atlas, the humanoid robot developed by Boston Dynamics, and ranked among the top five on the KOSPI. But after the market slumped in August, the stock fell to sixth place by mid-September and then to seventh, surrendering its position to LG Energy Solution. Its gap with eighth-ranked KB Financial Group (56.4308 trillion won) has narrowed to about 7 trillion won. The valuation that had reflected growth prospects in robotics and physical artificial intelligence is unwinding quickly.
The main weight on the stock is uncertainty over earnings. The union strike disrupted domestic production in the third quarter, while a stronger won and higher raw material costs squeezed profitability. Hyundai Motor Securities estimates third-quarter operating profit at 2.3502 trillion won, down 7.4% from a year earlier and 16.6% below the market consensus of 2.8194 trillion won. Global wholesale sales excluding China came to 909,000 units, down 9.7% from a year earlier.
Brokerages are also lowering their earnings expectations. Kiwoom Securities cut its target price for Hyundai Motor by 14.3% to 600,000 won from 700,000 won, reducing both its expected earnings per share and the price-earnings ratio it applies to reflect weak sales from the strike and diminished expectations for new businesses. It also pointed to foreign ownership, which exceeded 35% in January and has fallen to the 24% range since August, as a burden. For foreign money to return, the brokerage said, a recovery in the core auto business must come before expectations for new ventures. Shinhan Securities likewise cut its operating profit estimates for this year and next by 14.2% and 25.3%, respectively, and lowered its target price to 630,000 won from 780,000 won.
Analysts say the key to any recovery in the stock lies in improved profitability in the auto business and visible results from new ventures. With the strike over, normalized production and the launch of the new Avante and Tucson are expected to support a sales recovery in the fourth quarter. Growing demand for hybrid vehicles is also cited as a factor that could lift earnings. Still, with the stronger won continuing to pressure margins, analysts say gains in the share price may be limited until concrete results emerge from the robotics and self-driving businesses.
"If earnings grow in 2027 and some of the value of new businesses such as robotics and self-driving is recognized, the stock could rebound quickly to the 400,000 won range," said Park Kwang-rae, a research fellow at Shinhan Securities. "If the earnings recovery is delayed and the value of the robotics business is not highlighted, the stock is likely to keep moving within a range."
