The value of GM stock fell during the April 13th, 2020 to April 17th, 2020 timeframe. Shares closed the week at $22.48 per share, which represents a decrease of $1.58 per share, or nearly 7 percent, compared to last week’s closing value of $24.06.
Movement & Ranges
By comparison, shares of GM’s cross-town rival, the Ford Motor Company, decreased $0.25 per share, or 5 percent, this week.
GM Stock Factors
A month ago, GM stock value closed at a mere $16.80 per share. The fact that share values have recovered from last month’s blow may be surprising to some, and not so surprising to others. As such, the future of GM stock is uncertain, though that depends on who you ask. Generally speaking, there are currently two schools of thought when it comes to investing in GM.
On the one hand, some still think that, due to the complications caused by the ongoing COVID-19 outbreak, things will get worse before they get better. Deutsche Bank Analyst Emmanuel Rosner recently wrote in a report that GM has about “15 [to] 17 weeks of liquidity under shutdown conditions before hitting its minimum cash levels.”
Indeed, a scenario like the current, wherein GM does not produce any vehicles, can result in a perilous position not only for GM, but also for the big three U.S. automakers that find themselves in a similar situation. For its part, GM drew down $16 billion in credit while keeping its divided to cope with impacts of the virus.
On the other hand, reports also indicate that the overwhelming majority of analysts still rate GM stock as a “buy”, which is a good sign for prospective investors. Another good indicator is the fact that the possibility of a downgraded credit rating did not seem to have an adverse effect on share values, as GM stock saw an increase in value following the news.
For context, below is a timeline illustrating all the ways that the coronavirus pandemic has influenced GM operations and other facets of the auto industry:
- January 27th: GM Imposes Employee Travel Restrictions
- February 7th: General Motors Chinese Venture Making Masks
- February 11th: Buick Encore GX, Chevrolet Trailblazer Production Halted In South Korea
- February 14th: Concern Grows Over GM’s Truck Business
- February 15th: GM China Resumes Production
- February 28th:
- March 6th: SAIC-GM Sales Plunge 92 Percent
- March 9th:
- March 12th: Projections Show 9 Percent Dip In U.S. Auto Sales
- March 13th: GM Asks Employees To Work From Home
- March 16th:
- March 17th:
- March 18th:
- March 19th:
- March 20th:
- March 22nd: Corvette Dealer Training Event In Spring Mountain Canceled
- March 23rd:
- March 25th: Industry Analysts Predict March Auto Sales Will Fall 40 Percent
- March 26th:
- March 27th:
- March 30th:
- March 31st:
- April 1st:
- April 2nd:
- April 6th: GM Offers Month To Month Lease Extensions
- April 7th: GM Foresees Credit Rating Downgrade
- April 9th:
- April 10th: Four GM Burtons Parts Facility Workers Test Positive For Coronavirus
- April 13th: GM Begins Making Ventilators
- April 14th: GM VP Barry Engle Compares COVID-19 Efforts To WWII
- April 15th:
- April 16th:
- April 17th:
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 are on the horizon, including the recently-announced GMC Hummer EV pickup and SUV, GM’s new and proprietary Ultium batteries, which debuted at GM EV Day in early March alongside a new, highly-modular BEV3 platform, which will underpin various upcoming electric models, such as the Cadillac Lyriq electric crossover, Cadillac Celestiq electric sedan, a smaller Cadillac EV crossover and various EVs from the Buick and Chevrolet brands. However, the Coronavirus breakout has led to delays for most of these products.
It’s worth noting that GM share values were experiencing this continued ebb and flow since mid-2018, long before coronavirus complications, though shares have never dipped to the levels seen in March and April.
For the most part, GM stock was in limbo throughout 2019, seeing a jump in value as a result of overwhelmingly positive Q2 2019 earnings, wherein the automaker outperformed expectations. Prior to the COVID-19 pandemic, several factors negatively impacted GM stock price during 2019, including:
- A UAW labor strike that lasted 40 days, resulting in no vehicles being built in the United States during that timeframe. The walkout also disrupted production at some GM plants outside the U.S.
- Warning signs of an economic slowdown
- Escalations with a trade war with China.
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, Volt, 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 (prior to the COVID-19 pandemic). 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 summer of 2020, especially following the COVID-19 crisis. The refresh many 2021 models will be delayed, including the Cadillac XT4, Chevrolet Traverse, Chevrolet Equinox, GMC Terrain, and Chevrolet Bolt EV.
Meanwhile, the Detroit-based automaker is continuing 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 that – once production restarts – the company will benefit from an entire calendar year of healthy vehicle availability and sales. These factors 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.