The value of GM stock fell during the April 27th, 2020 to May 1st, 2020 timeframe. Shares closed the week at $20.90 per share, which represents a decrease of $1.05 per share, or nearly 5 percent, compared to last week’s closing value of $21.95.
Movement & Ranges
By comparison, shares of GM’s cross-town rival, the Ford Motor Company, decreased $0.05 per share, or 1 percent, this week.
GM Stock Factors
This week’s drop in GM stock value marks the third consecutive week of decline. While we have posted that the recovery from last month’s blow had been reassuring off the cuff, the continued dip in share values is equally worrisome. For the most part, the market’s behavior seems to reflect the notion that, due to complications caused by the ongoing COVID-19 outbreak, things will continue to get worse before they get better.
For its part, GM drew down $16 billion in credit while keeping its dividend to cope with impacts of the virus. The General also faces the possibility of a downgraded credit rating. While GM no longer releases sales results on a monthly basis, some analysts believe that auto sales in the United States could have dropped by more than 50 percent. While the issue of whether investors should buy or sell GM stock remains a divided topic, Greenlight Capital has just recently decided to remove General Motors from its investment portfolio.
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: GM Canada Suspends Production
- 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: General Motors Doing A “Fantastic Job” Making Ventilators, Says Trump
- 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:
- April 20th:
- April 21st: Detroit Big Three, UAW Discussing Safety Protocols For Re-Opening U.S. Plants
- April 22nd:
- April 23rd:
- April 24th:
- April 26th: Chevrolet Offers Coloring Pages To Help Keep Kids Occupied During Pandemic
- April 27th:
- April 28th:
- April 29th:
- April 30th:
- May 1st:
It’s worth noting that GM share values were experiencing this continued ebb and flow since mid-2018, long before coronavirus complications, though shares never dipped to the levels observed in the first quarter of 2020, which have at least since stabilized.
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. In addition, GM recently announced its decision to shut down its Maven car-sharing service.
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 of many 2021 models will be delayed, including the Cadillac XT4, Chevrolet Traverse, Chevrolet Equinox, GMC Terrain, and Chevrolet Bolt EV. In fact, the overall roll-out plan for most GM products has been pushed back, which also includes the launch of the Cadillac CT4-V Blackwing and CT5-V Blackwing models. It could also prevent 2020 Corvette production from resuming on May 11th.
That said, there are still some good things happening for GM in 2020, including a 27 percent growth in Silverado sales, and strong Chevrolet Blazer sales. The retooling of the GM Arlington assembly plant in Texas in under way, meaning the company’s redesigned line of full-size SUVs should hit the market on schedule. The General is also playing its part in combating the negative impacts of the coronavirus on the country as a whole.