Major global auto stocks have experienced significant declines in 2024, with many facing growing short positions and increased analyst sell recommendations. Notable patterns emerge across regions, with larger companies like Toyota, Volvo, and Porsche showing a rise in short interest and sell ratings, while smaller firms exhibit persistent short positions with minimal shifts in analyst sentiment.

Many car companies have large short positions.

In Europe, Volvo ($25B Market cap) and Porsche ($6B) have seen their short positions double YTD. In Japan, Toyota ($5B) have experienced similar increases in short interest.

In the US, three companies are notable for their short positions: LCID ($8B), RIVN ($15B), WGO (1.5B), and NIO ADR ($9B). These stocks started the year with relatively high short positions.

These stocks are down, on average, 33% in USD terms YTD, while country indices are all up.

For the major stocks in each region, the short position has grown as the stock has fallen. For the smaller stocks, many had large short positions to begin with.

Porsche and Nissan follow a reversal pattern, with shorting on the way up and covering on the way down. Volvo and WGO show a similar trend, though with a weaker relationship.

NIO follows a momentum strategy, with shorting on the way down; RIVN is less pronounced in this pattern.

The pattern of analyst sell recommendations mirrors the short sales by investors.

Toyota has the highest number of "sell" recommendations, but all three major companies have seen a rise in sell ratings as short interest has increased (see arrows). The methodology for issuing a sell recommendation and shorting a stock can often be quite similar.

The smaller companies, whose net short positions have not changed significantly, also did not experience a major increase in "sell" recommendations.

Most auto companies in the region do not have large short positions, so this is more of an individual company story. However, there are some major companies where this pattern is evident.

The global auto sector’s struggles in 2024 highlight key trends in short interest, stock performance, and analyst sentiment. Are these shifts opportunities or warning signs for your portfolio? Contact us to explore actionable insights for navigating the year ahead.

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