The value of GM stock decreased significantly during the February 24th, 2020 to February 28th, 2020 timeframe. Shares closed the week at $30.50 per share, which represents a notable decrease of $4.15 per share, or 12 percent, compared to last week’s closing value of $34.65.
Movements in GM stock value for the week were as follows:
- Monday, February 24th: General Motors stock opened at $33.64 and closed at $33.09
- Tuesday, February 25th: GM stock opened at $33.25 and closed at $31.75
- Wednesday, February 26th: GM stock opened at $32.10 and closed at $32.00
- Thursday, February 27th: GM stock opened at $31.30 and closed at $30.71
- Friday, February 28th: General Motors stock opened at $29.78 and grew to $30.50 by market close
The above average decrease in GM stock value comes after last week’s very slight decline of less than one percent. Prior to that, GM shares experienced two consecutive weeks of growth, which in turn followed two weeks of decline. GM share values have been experiencing this continued ebb and flow since mid-2018, though the performance is ultimately a net loss for GM shareholders. The global impact of the coronavirus is negatively affecting the stock market as a whole. There are even claims that the infamous bug may have caused delays at the Flint Assembly plant in Michigan. However, the automaker is continuing mandatory overtime at the plant.
There is some good news, though. A recent analysis shows that GM’s full-size SUVs outsold all rivals combined in 2019. Additionally, new products continue to earn recognition and credibility, such as the 2020 Cadillac XT6 which was named an IIHS Top Safety Pick+, and the Chevrolet Equinox was ranked the best compact SUV in J.D. Power’s 2020 Vehicle Dependability Study. Hopefully these feats start to build some momentum, and promote some consistent GM stock growth.
Of course, there are many other factors contributing to the current rut. For starters, when GM released its Q4 2019 sales figures four weeks ago, share values experienced a decline of over 6 percent. It’s possible that the news may have contributed to the continued decline in GM stock. It’s also possible that delays caused by the UAW strike and the consequential customer dissatisfaction due to parts shortages are contributing to this decline in GM stock value. Additionally, the recalls announced recently, which involve an incorrect alternator connection in GM full-size pickups, as well as a faulty brake control module in the Chevrolet Silverado, the GMC Sierra and the Cadillac CT6, could have also eroded the previous upward momentum.
Other aspects may also be influencing GM stock value, including the RICO lawsuit GM filed against FCA, in which GM claims that FCA was “paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration” of the labor agreements. Adding to the drama is the fact that UAW President Gary Jones stepped down amid the investigation. However, it’s unclear how either event impacted GM’s stock value at this time.
For the most part, GM stock has been in limbo throughout most of 2019. GM stock saw an initial jump in value as a result of overwhelmingly positive Q2 2019 earnings, wherein the automaker outperformed expectations. Several subsequent drops in value prior to the strike are believed to have been related to warning signs of an economic slowdown, along with various escalations with trade wars in China.
By comparison, shares of GM’s cross-town rival, the Ford Motor Company, decreased $0.93 per share, or 12 percent, this week.
Over the last few years, GM has taken many steps to increase the value of its stock, including exiting markets where it can’t find ways to turn a profit (such as Europe, South Africa and India), closing plants in various parts of the world, divesting loss-making divisions (such as Opel-Vauxhall), making adjustments to its business model in order to prioritize profitability over chasing market-share goals, focusing on its Cadillac luxury brand to increase its share of high-profit automobiles, investing heavily into new-age mobility ventures such as electric vehicles and autonomous driving tech, while discontinuing some sedans (Cruze, Impala, LaCrosse, XTS, CT6) and closing various plants to focus on more profitable crossovers, SUVs and pickup trucks, such as the all-new 2021 Cadillac Escalade that was unveiled on February 4th.
Seeking to further streamline its activities in unprofitable markets, General Motors also announced its intention to phase out the Holden brand in Australia and New Zealand, in addition to pulling the Chevrolet brand out of Thailand and selling its Rayong assembly plant to Great Wall Motors.
Despite these actions, the value of GM stock has struggled to surpass the $40 mark, spending most of its time stuck in the $33-$38 per share range. The chain of events is problematic given that the “new GM” had its Initial Public Offering (IPO) at $33 per share in November 2010, causing frustration upon many investors.
We remain interested in seeing how GM stock performs through the early stages of 2020, especially as the Detroit-based automaker continues the launch of its GEM-based vehicles for developing markets and begins to launch its all-new full-size SUVs and various new Cadillac models this year. In addition, the roll-out of its full-size pickup trucks is now complete, which means the company will benefit from an entire calendar year with a full lineup. All of these products are expected to contribute significantly to GM’s bottom line.
The automaker is also planning to roll out the Cruise Origin, its autonomous ride-sharing vehicle in 2022, which will be built at the GM Detroit-Hamtramck plant in Michigan. GM sees the robo-taxi service as a significant opportunity for growth.
In July 2019, GM unveiled the new Corvette, which adopts a mid-engine layout for the first time in its history. Production of the mid-engine Corvette, also known as Corvette C8 or the 2020 Corvette, is underway, and the convertible model, announced in October 2019, will launch in 2020 as well. The Corvette is a noteworthy contributor to GM’s financial performance, since the Corvette carries healthy profit margins.