JPMorgan Says General Motors Stock Is ‘Very Inexpensive To Us’

Investment banking firm JPMorgan announced it was cutting its estimate of General Motors’ second-quarter earnings by $200 million after the automaker recalled an additional 2.7 million vehicles Thursday, Detroit News reports.

GM shares have fallen 15 percent in 2014, largely due in part to its widely publicized recall woes. Many major investors revealed Thursday they had cut or sold off their shares of GM stock during the first quarter of this year, including high-profile investor Warren Buffett, the largest shareholder of conglomerate holding company Berkshire Hathaway.

Estimates from GM Thursday put the amount this latest round of recalls would cost at $200 million. It set aside $1.3 billion in the first quarter of 2014 in order to handle the recall of 2.6 million small vehicles for an ignition switch defect which was linked to 13 deaths in 32 crashes.

Despite the negative publicity currently surrounding the company, JPMorgan noted the minuscule effect it is having on GM’s sales.

“GM continues to see no meaningful impact to its sales or market share from the recently announced recalls,” the firm said.

Automotive analyst Ryan Brinkman went a step further, toying with the idea that the recall may have had the opposite effect of what was expected.

“We are beginning to wonder if recent recalls might paradoxically benefit GM sales and market share, given the resultant sudden large influx of dealer traffic,” he wrote.

JPMorgan also noted the initial $1.3 billion loss reported for the first quarter was based on “the assumption that an atypically large percentage of customers would elect to bring their vehicles in for repair.”

In light of the recall, GM stock dropped 1.7 percent Thursday to $34.36, down $0.58 and was off 1.1 percent in pre-market trading Friday at $33.98.