General Motors Company shares recovered some of their value in Friday trading after experiencing their biggest one-day drop earlier in the week.
GM stocks ended trading on Friday at $37,53 USD, an increase of $0.77 or 2.09 percent. The stocks gained another $0.17 or 0.45 percent in after-hours trading.
The improvements are noteworthy after the beating the automaker’s shares took on Wednesday, where they lost 4.6 percent of their value, representing the biggest one-day percentage decrease since November 2011. The stock lost another 2.4 percent on Thursday, closing at $36.75. In the 48 hour-long period from Wednesday, July 25th to Thursday, July 26th, GM shares lost 7.4 percent of their value.
The reason for the steep drop is widely believed to be the automaker’s second quarter 2018 earnings, as the automaker revealed that costlier raw materials and unfavorable exchange rates in Brazil and Argentina will negatively impact its earnings for the year. The headwinds will cost the company approximately $1 billion in profit in 2018.
As a result, GM has adjusted profit outlook for the year downward, signaling earnings of about $6 per share for 2018. Earlier in the year, the auto giant forecasted earnings in line with last year’s figure of $6.62 per share.
During Q2 2018, General Motors’ pretax profit fell 13.3 percent to $3.2 billion. The automaker’s North American operations – by far its biggest and most profitable, were impacted more than any of its other regional divisions.
The GM Authority Take
It would appear that investors at large have reconsidered GM stock as an investment opportunity on Friday, despite the initial sell-off after the unfavorable Q2 2018 earnings report and associated downward forecast adjustment.
Could it be that Wall Street views the GM’s various non-core efforts, such as monetizing autonomous vehicle division, as major contributions to the automaker’s bottom line? Stay tuned as we learn more.