The value of GM stock grew during the November 16th, 2020 to November 20th, 2020 timeframe. Shares closed the week at $43.04 per share, which represents an increase of $1.85 per share, or nearly 5 percent, compared to last week’s closing value of $41.19.
Movement & Ranges
By comparison, shares of GM’s cross-town rival, the Ford Motor Company, grew $0.20 per share, or 2 percent, during the November 16th, 2020 to November 20th, 2020 timeframe. It’s worth mentioning the fact that The Blue Oval recorded a better U.S. sales performance during Q3 2020, beating out all three fellow domestic automakers: GM, FCA, and Tesla.
GM Stock Factors
Last week’s performance marks the third consecutive week of growth for GM stock. On Thursday, GM CEO Mary Barra shared the company’s intention to launch a total of 30 new electric vehicles globally by 2025, with a total investment of $7 billion. In fact, The General teased its upcoming GMC Hummer EV SUV as well as its future Chevy EV pickup truck during the Barclays 2020 Global Automotive Conference live stream last week.
The news builds on the expectation of a significant boost to stock prices following a spin-off for GM electric vehicle business. Notably, General Motors is now working hard to introduce 30 new EV models by 2025. It’s also worth pointing out that the same can also be said for Ford, and such a trend would undoubtedly benefit another competitor as well, Tesla. More recently, the announcement of the GM-Honda alliance may also be of great significance to investors.
The optimistic projections followed GM’s plan to roll out an electrified portfolio, which includes an electric van, a Chevrolet EV pickup truck, the GMC Hummer EV as well as the Cadillac Lyriq, which was revealed in August and should have a starting price of under $60,000. Shortly before the reveal of the all-new GMC Hummer EV pickup truck on October 20th, GM stock prices were up 6.75 percent to $35.60 per share before continuing on to a weekly high of $38.03 on Friday morning, October 23rd.
Momentum has been building since, with news of the Wuling Hong Guang Mini EV taking the title of ‘best-selling electric vehicle in China‘ for the month of October appears to have given GM stock a bit of a boost. According to reports, GM shares experienced a four percent jump in value following the welcome news. The automaker has also confirmed its intention of selling its line of next-generation full-size SUVs in China.
Another factor that is most likely impacting GM stock performance would be the election of Joe Biden, though it seems that this will be an unprecedented transition of power which may lead to a high level of uncertainty in the market. A second substantial consideration amongst investors would be GM’s Q3 2020 earnings, which were headlined by a $4 billion income on $35.5 billion in revenue. Compared to the third quarter of 2019, these results represent a 74 percent jump in income on equal revenue.
Despite tight inventory, GM’s large pickup trucks sold well during the third quarter, especially heavy-duty models – the Silverado HD and Sierra HD. Through the third quarter, GM’s large pickups gained 1.7 percentage points in retail market share, leading the segment with 37.5 percent share, based on J.D. Power data. It’s also worth highlighting the fact that the Chevy Corvette just received a segment award in the J.D. Power 2020 U.S. Resale Value Awards, which aim to identify which vehicle makes and models hold the highest percentage of their original resale value after three years of ownership.
Moreover, production of the C8 Corvette is back on track following a stop in production due to supplier constraints, marking the third “restart” of the new-generation sports coupe’s assembly line this year.
General Motors president Mark Reuss confirmed that the automaker was still in discussions to form a partnership with Nikola, during a recent conference call with analysts. Notably, Nikola shares were up by 10 percent following the statement. GM has so far maintained its position regarding its strategic partnership with Nikola and the electric truck startup’s controversial woes.
Several weeks ago, we reported on GM’s agreement to repay $28M in state tax incentives as well as a renegotiation of the Nikola Motor Company deal, wherein The General would get an increased stake in the electric pickup truck startup. As reported, Nikola Motor Company shares fell following claims that company founder, Trevor Milton, overstated the startup’s tech capabilities, while GM held its ground and maintained its support of the agreement. Mr. Milton has since stepped down and the Securities and Exchange Commission and U.S. Department of Justice have begun their investigations. Currently, Nikola stock is valued at $26.38 per share, after reaching $50.05 on September 8th and falling to $17.88 on September 29th.
Electric vehicle startup Lordstown Motors recently began publicly trading on the NASDAQ as “RIDE.” This may seem favorable to investors, as GM previously announced it would invest $75 million into the EV startup, including $25 million in cash, and $50 million in production plant assets permits. GM also appointed new personnel this week, with Paul Jacobson stepping in as the new executive Vice President and CFO.
Other recent developments that may be influencing the value of GM stock include General Motors Ventures‘ new interest in Envisics, a U.K.-based startup developing augmented reality (AR) technology for automotive applications. GM believes the tech may find a place in the automaker’s up-and-coming all-electric vehicle models, such as the Cadillac Lyriq crossover. On a somewhat related note, The General and its autonomous driving subsidiary, Cruise, will soon apply for an exemption that will allow it to begin testing vehicles without a steering wheel or pedals on public roads in the United States.
GM has also resumed construction at the site of its Canada McLaughlin Advanced Technology Track in Oshawa, Ontario after it was forced to postpone the project due to the COVID-19 pandemic. GM’s decision to begin producing trucks at the Oshawa plant has sparked a sense of concern amongst U.S. workers, who are now anxiously anticipating volume reduction. GM announced last week that it would invest between $1 billion and $1.3 billion in the GM Oshawa Assembly plant in order to begin producing the Chevy Silverado and GMC Sierra pickup trucks there.
Moreover, The General recently announced that it’s seeking to add 1,100 new team members to the Ultium Cells LLC battery production plant in Lordstown, Ohio. The facility will mass-produce Ultium battery cells for use in General Motors’ upcoming range of all-electric vehicle offerings.
GM During COVID-19
The coronavirus pandemic initially forced GM to idle production across North America, South America and China as a result of the virus, putting the firm in a very unfavorable position. During such a scenario, any automaker – GM included – sees revenues fall sharply while rapidly burning through cash, resulting in a loss-making turn of events. Since the beginning of the pandemic, GM production in China has resumed, as did production across North America on May 18th.
GM has taken major steps to get through the COVID-19 pandemic, with the actions primarily revolving around fortifying its balance sheet. These moves entail reducing and/or deferring expenses, while shoring up cash and other forms of liquidity.
The General also had to cope with a small number of coronavirus cases at some of its facilities, including 22 confirmed cases at the Arlington plant in Texas and more recently, about 25 confirmed cases at the Flint plant in Michigan. Despite a high rate of worker absenteeism, GM has decided to keep the third shift at the Wentzville Assembly plant by relocating employees, after previously announcing that it would be cut. However, no major outbreaks have been officially reported so far.
GM Before COVID-19
It’s worth noting that GM share values were experiencing ongoing ups and downs since mid-2018, long before coronavirus complications, though shares never dipped to the levels observed in the first quarter of 2020.
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. Production was also idled in other countries as a result of supply chain-related issues caused by the UAW strike
- 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, Sonic, Volt, Impala, Regal, 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 minimize 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 while selling the GM Rayong Manufacturing Complex 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 historically struggled to surpass the $40 mark, spending most of its time 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 rest of 2020, especially following the COVID-19 crisis and upcoming 2020 presidential election.
Additionally, 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.
That said, there are still some good things happening for GM in 2020, including market share gains and production increases for the Silverado and the Sierra during Q2 2020 as well as strong Chevrolet Blazer sales and Chevrolet Trailblazer sales. Notably, GMC Sierra inventory is extremely low as the automaker can’t build enough of them to meet strong demand. Most of GM’s range of redesigned full-size SUVs are now in stock on dealer lots, which includes the 2021 Chevrolet Tahoe and 2021 Suburban as well as the 2021 GMC Yukon and 2021 Yukon XL. Notably, the diesel-powered Tahoe and Suburban are now available to order.