Renault on stock market

From the start of 2011, the share price movement of Renault was quite erratic due to its last year strategic scandal which was partly discussed in previous post. Briefly, at the end of last year, the company secret about its electric-car plan was spread out publicly. Company suspected two men who are Michel Balthazard, formerly a member of the Renault management committee and a top official of the company’s electric car program, and his subordinate Bertrand Rochette of being spies for international rivals. Renault supposed China has a link to this scandal, but it made no clear evidences for that accusation. The problem would not have had such strong impact if company had solved the issues internally. Up to now, the company’s accusations of two men’ espionage and dirty trick of international rivals are critically argued.This long lasting fight was one of the main reasons making Renault’s share prices unstable over the past few weeks. The misfortune started on 12 Jan, 2011 when the share price was on downward trend from 49.33 to 46.98 on 20 Jan, 2011. Maybe, the problem cannot really affect the business and shareholders’ benefits, but the behaviours of investors are influenced by public’s trends and responses. That is how current global market moves.

After suffering the downturn in few days, Renault seemed to see brighter future when luckily, the movement was inversed. Against an expected scandal, company quickly drew out some feasible and credible projects including the merging with alliance partner and paying off debts (which might prove its strong liquidity management). New instant strategies did help to pull the company’s share price up, but incompletely. Unfortunately, bad news is always more attractive and has stronger effects than good news. From the peak of 49.46 on 27 Jan, 2011, its share went down to 46.10 after 6 days.

The rescue plans cannot totally win the rumours and arguments around the past story. As being thought, the full merge of Renault and Nissan could have some restrictions. Carlos Ghosn, a CEO of both two companies, agreed on 10 Feb about its infeasibility, but believed in future structural development. None of us can measure the success (or maybe, failure) of this merge in the future, but visibly see the descending line by this time and the endeavor of Renault standing up to the storm.