The value of GM stock grew during the April 6th, 2020 to April 10th, 2020 timeframe. Shares closed the week at $24.06 per share, which represents an increase of $6.02 per share, or over 33 percent, compared to last week’s closing value of $18.04.
Movements in GM stock value for the week were as follows:
- Monday, April 6th: General Motors stock opened at $19.10 and closed at $19.55
- Tuesday, April 7th: GM stock opened at $21.27 and closed at $21.30
- Wednesday, April 8th: GM stock opened at $21.74 and closed at $23.13
- Thursday, April 9th: GM stock closes the day and the week at $24.16 and closed at $24.06
- Friday, April 10th: stock market closed in recognition of Good Friday holiday
The rebound in GM stock value may be surprising to some, and not so surprising to others. Generally speaking, there are currently two camps 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. In a recent report by Barron’s, Deutsche Bank Analyst Emmanuel Rosner said GM has about “15 [to] 17 weeks of liquidity under shutdown conditions before hitting its minimum cash levels.” As such, the analyst remains cautious despite rising share values.
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 rose following the news.
Interestingly, 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.
The impact of the COVID-19 pandemic is not to be understated, as the Big Three domestic auto manufacturers – Ford, FCA, and GM – have ceased production amid the outbreak. That said, there is a notable difference in other key decisions made by the companies. Case in point, Ford opted to borrow $15.4 billion from its existing credit lines and suspend its dividend, while GM drew down $16 billion, while keeping its divided.
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:
- April 7
- April 9th:
- April 10th:
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 advanced new proprietary Ultium batteries, which debuted at GM EV Day in early March, and a new modular BEV3 platform, which will underpin various upcoming electric models, such as the Cadillac Lyriq electric crossover, Cadillac Celestiq electric sedan, another 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.
By comparison, shares of GM’s cross-town rival, the Ford Motor Company, increased $1.13 per share, or 27 percent, this week.
For the most part, GM stock was in limbo throughout most of 2019, and has only faced more adversity in 2020. GM stock saw an initial jump in value as a result of overwhelmingly positive Q2 2019 earnings, wherein the automaker outperformed expectations. Prior to onslaught of the COVID-19 pandemic, 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.
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 summer of 2020, especially during the COVID-19 crisis. The refresh of a bunch of 2021 models will be delayed, such as the Chevrolet Silverado 1500, GMC Sierra 1500, Cadillac XT4, Chevrolet Traverse, Chevrolet Equinox, GMC Terrain, Chevrolet Bolt EV and Chevrolet Camaro.
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 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.