Why is Honda stock soaring despite posting first loss since 1948

Honda’s latest results paint a sharply weaker picture of the company’s performance, with both operating and net income slipping into loss for the first time in decades.

The company reported an operating loss of ¥414.3 billion and a net loss of ¥423.9 billion for the year ended March 2026, its first annual loss since it was founded in 1948.

Yet the stock rose 7% on Friday because investors were not buying the past; they were buying the next 12 months.

Honda’s forecast for the year ahead calls for ¥500 billion in operating profit, well above Bloomberg’s consensus estimate of ¥212.4 billion, and that forward view mattered more to the market than the headline loss.

The result was a share-price rally even as the company booked one of the worst years in its modern history.

Honda stock: A historic loss

The annual loss was not a surprise as Honda said the damage was driven mainly by EV-related writedowns and restructuring costs, not by a sudden collapse in its core business.

The company booked ¥1.4536 trillion in EV-related losses for the year, and it said the tariff hit alone clipped operating profit by ¥346.9 billion.

But Honda’s adjusted operating profit excluding EV losses was still ¥1.0393 trillion, which shows the underlying business remained profitable once the one-off charges were stripped out.

Honda had already warned in March that it was facing up to ¥2.5 trillion in EV-related costs, so much of the bad news was already known.

That is why the market reaction looked so counterintuitive.

Honda stock had already fallen sharply when the company first flagged the loss, but this week’s results confirmed the scale of the write-off while also showing the damage was concentrated in one strategic bet.

The guidance number changed the story

The real market-moving number was not the loss, but the guide for the year ahead.

Honda said it expects ¥500 billion in operating profit in fiscal 2027, and the stock rose on the back of that outlook and the company’s unchanged annual dividend of ¥70 a share.

Honda also said it aims for record motorcycle sales of 22.8 million units, with India and Brazil driving record-high motorcycle volume and operating profit in the year just ended.

In other words, the business that throws off cash is still doing the heavy lifting while the auto division restructures.

That matters because markets value earnings power ahead, not just the previous year’s result.

If management can show a credible path back to profit, even after a historic loss, investors are often willing to look through the damage.

Honda’s 2027 guidance reassured the market that the EV reset is not expected to cause lasting damage, but rather a recovery.