Reportedly, Nissan (NSANY) is recalling roughly 46,000 of its 2009 - 2010 Cubes in the United States because of non-compliance with federal motor vehicle safety standards. According to the automaker, a fuel leak developed during crash tests. This leak could result in a fire, according to the National Highway Traffic Safety Administration. Nissan said that when "the vehicle was rotated following a rear moving barrier crash test as required, the amount of fuel leakage exceeded the allowable limits."
A quick glance at NSANY's chart shows that fuel isn't the only thing that the company is leaking. Recently, the stock has slipped, but we have to take a look at the whole situation. NSANY bulls may quickly point out that the stock is selling in the $15 region after hitting a low in the $6 region in early 2009. While this performance is admirable, the stock still has a ways to go to reach its five-year high in the $27 region (reached in May 2006). Standing in the equity's way is its 20-month moving average and its 50-month trendline, both of which could prove to be too much for the shares to fight through.
Of course, let's not forget the fundamentals for Nissan. Yes, some of the company's cars are good sellers - but if Nissan keeps producing cars that look like the Cube we could see sales slump. Seriously, would it have surprised anyone if Nissan recalled the Cube because they are ugly?