German multinational investment bank Deutsche Bank has downgraded GM stock from a Buy rating to a Hold rating in advance of GM’s Q2 2022 earnings report, citing ongoing global supply chain issues, fears over a possible recession, and weakening demand among consumers.
“While earnings could remain stronger for longer, we thing OEMs (with the exception of Tesla) will struggle to catch investor attention on the current side of the economy cycle,” Deutsche Bank said. The German investment bank lowered earnings estimates and cut the GM stock price target from $57 to $36.
GM stock value has fallen considerably this year in the wake of long-lasting supply chain issues and other economic factors. Earlier this year, however, GM stock value was on the rise, peaking at $67.21 in January on the back of several big electric vehicle product announcements at the 2022 Consumer Electronics Show. Since then, however, GM stock value has been in decline, falling below $40 per share in June. GM stock value opened at $33.30 per share Monday morning.
Like the rest of the auto industry, GM has been plagued by production issues as a result of the ongoing global microchip shortage, which has forced the automaker to halt production lines and prioritize limited microchip supplies only for its most profitable models, namely GM’s pickup trucks and SUVs. However, in response to the shortage, GM has announced that it will move towards its own family of microchips, buying and controlling the flow of the components directly in order to shore up supplies in the longterm.
Unfortunately, the short-term appears to be more of the same, with the effects of the microchip shortage expected to remain in place until at least next year.
GM recently released its Q2 2022 sales report, headlined by a 15-percent decrease in U.S. sales to 582,269 units. Sales decreased at all four GM U.S. brands, including Buick, Cadillac, Chevrolet, and GMC.