GM sales increased a very healthy 6.3 percent to 738,638 units sold during the third quarter of 2019. Sales increased at each of the four General Motors brands (Buick, Cadillac, Chevrolet and GMC), with GM’s highly profitable full-size truck models, the Chevrolet Silverado and GMC Sierra, leading the charge with upticks of 16.62 percent and 28.87 percent, respectively. In fact, cumulatively speaking, the two GM trucks outsold those at Ford and Ram. All good news, no doubt about it, and yet GM stock is down.
GM stock tumbled 3.2 percent on Wednesday, October 2nd following the sales announcement, opening the day at $35.77 but finishing the day at $34.62. How can that be? Why are investors blind to the fantastic results that GM just posted?
Perhaps it gets down to the latest United Auto Workers strike. With roughly 50,000 union members participating in a nationwide walkout, maybe it shouldn’t come as a surprise that GM stock value would take a hit.
The strike is currently closing in on the end of its third week, making for the longest nationwide autoworker strike GM has seen in decades. Looking back, we see GM stock tumbling to 37.21 on Monday, September 16th, the day the walkout took effect, dropping 1.65 from the 38.86 posted that preceding Friday. However, the very next day, GM stock bounced back to 38.29, so clearly, investors weren’t completely scared off by the strike. That makes the 3.2 percent sell-off following the third-quarter sales figures that much stranger.
That said, the value decrease may once again get back to the strike, with investors reacting to reports that the UAW and GM are still working to hammer together a new labor contract. Some analysts have reported that GM has lost upwards of $1 billion in potential profits, a figure we think is an oversimplification, but surely something that grabs the attention of wary investors.
Now, with the announcement of the new 2020 Corvette Convertible, we would expect at least a modest bump in GM stock value. Nevertheless, the stock continues to fall, currently standing at 34.38 as of this writing. It’s possible that as soon as GM and the UAW find a solution, the value of GM stock will bounce back up, and bounce back up big time, but so far, a viable solution remains elusive.