Compared To The USD, Auto Company Stocks Are On A Summer Vacation

Summer is here, and it’s time for a vacation. But this year, flight schedules are anything but reliable, and that new car for the road trip is probably not available at the local Toyota, Honda, Tesla, General Motors, Ford, etc dealership. Due to chip shortages and other issues, most car dealerships have little to no inventory to sell.

High inflation and rising interest rates combined with high gasoline prices are causing people to rethink or pay more attention to their monthly budget expenditures.

Furthermore, if you do decide to buy a used car, be prepared to pay top dollar. In some cases, a 3-year-old model may cost you as much as a new one. Historically autos almost always depreciate, but we are in an unusual market phenomenon where many used cars have appreciated significantly.

What about the auto company stocks themselves? Cash is looking great versus owning one of these auto brands.

Before we motor into the auto company stocks, let’s take a quick look at cash (the U.S. Dollar).

U.S. DOLLAR +18.81%

  • U.S. Dollar making a new 14-year high
  • 2020-2022 U.S. Presidential Cycle: USD appreciated +18.74% to date
  • 2016-2020 U.S. Presidential Cycle: USD depreciated – 12.80%
  • 2012-2016 U.S. Presidential Cycle: USD appreciated +37.20%

US DOLLAR INDEX • DXY • WEEKLY

US Dollar Index Weekly Chart

TOYOTA -26.93%

  • January 2022 to present
  • -$56.77 or -26.93%
  • 22 weeks or 154 days down
  • The bear market has more room to drop; if you own it consider selling on rallies and going to cash

TOYOTA MOTOR CORPORATION • TM • NYSE • WEEKLY

Toyota Motor Corporation Weekly Chart

HONDA -27.57%

  • August 2021 to present
  • -$9.19 or -27.57%
  • 47 weeks or 329 days down
  • The bear market has more room to drop; if you own it consider selling on rallies and going to cash

HONDA MOTOR COMPANY, LTD. • HMC • NYSE • WEEKLY

Hondo Motor Company Weekly Chart

TESLA -47.38%

  • November 2021 to present
  • -$582.69 or -47.38%
  • 32 weeks or 224 days down
  • The bear market has more room to drop; if you own it consider selling on rallies and going to cash

TESLA, INC. • TSLA • NASDAQ • WEEKLY

Tesla Inc Weekly Chart

GENERAL MOTORS -50.18%

  • December 2021 to present
  • -$31.91 or -50.18%
  • 27 weeks or 189 days down
  • The bear market has more room to drop; if you own it consider selling on rallies and going to cash

GENERAL MOTORS COMPANY • GM • NYSE • WEEKLY

General Motors Weekly Chart

FORD -55.71%

  • January 2022 to present
  • -$14.11 or -55.71%
  • 22 weeks or 154 days down
  • The bear market has more room to drop; if you own it consider selling on rallies and going to cash

FORD MOTOR COMPANY • F • NYSE • WEEKLY

Ford Motor Company Weekly Chart

HOW WE CAN HELP YOU LEARN TO INVEST CONSERVATIVELY

At TheTechnicalTraders, my team and I can do these things:

  • Reduce your FOMO and manage your emotions.
  • Have proven trading strategies for bull and bear markets.
  • Provide quality trades for investing conservatively.
  • Tell you when to take profits and exit trades.
  • Save you time with our research.
  • Proved above-average returns/growth over the long run.
  • Have consistent growth with low volatility/risks.
  • Make trading and investing safer, more profitable, and educational.

Sign up for my free trading newsletter so you don’t miss the next opportunity!

We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

Brace Yourself For Another Wild Month In Stock Markets

For the year, the Dow is down -6%, the S&P 500 is down just over -9%, and the Nasdaq has lost -14.7%. The previous record-holder is January 2009, an ugly moment for the economy, when the stock market fell -8.6%. In addition, the VIX – aka the CBOE Volatility Index – has actually dropped back to around 31 after topping 37 earlier this week, its highest point since November 2020.

Keep in mind, the index isn’t registering anywhere close to levels reached during other periods of “extreme” volatility. For example, the index, which is measured between zero and 100, hit its highest point of almost 83 during the financial crisis in 2008. Its most extreme point during the pandemic was around 66 in March 2020. So, by comparison, this week’s volatility has been rather mild.

Federal Reserve

Some insiders equate the wild swings in stock prices to investors, particularly “big money,” trying to establish a new baseline for stock valuations minus the Fed’s easy money policies that have driven a massive amount of cash into markets since the pandemic began in 2020.

At its height, the Fed was pumping as much as +$120 billion per month into the system via its asset purchase program, ballooning its balance sheet to now nearly $9 trillion.

At the same time, the Fed has held its benchmark rate at near-zero and, before that, hadn’t even attempted to raise rates since 2018, and then only briefly. The last full-cycle of rate hikes was 2015. What’s more, investors haven’t really had to factor for inflation since the early 90s and it hasn’t been this high since the 80s.

Bottom line, whatever the new “normal” ends up looking like, it will be dramatically different from the pre-pandemic investing landscape. I’ve heard several large stock traders saying it seems to be the return of Alpha instead of the race to levered Beta. I hear others on Wall Street referencing it to a bit of league recreational youth baseball team where everybody now gets an award simply for participation, but then kids run into a rude awakening when performance really starts to matter.

It feels like we are there in the stock market; every business that was coming into the market was simply being rewarded with participation points, now people are starting to keep a real scorebook and counting the strikeouts and runs scored.

Economy still roars

The good news is that the U.S. economy continues to roar. Historically, a combination of moderate inflation and moderate interest rates has led to some of the biggest boom times for U.S. Last week, the Commerce Department said Q4 Gross Domestic Product (GDP) grew at an annualized rate of +6.9%, stronger than Q3’s +2.3% and well above Wall Street expectations of around +5.7% growth.

Consumer spending climbed at a +3.3% annual pace led by a +4.7% increase in services spending. But the real stand out was private investment which rocketed +32% higher, boosted by a surge in business inventories as companies stocked up to meet higher customer demand. Rising inventories, in fact, contributed nearly +5% to Q4 GDP growth.

On the one hand, the inventory build is positive because it indicates an easing of supply chain dislocations that should in turn help with inflation pressures. On the other hand, many economists note that the big boost from retailer and wholesaler restocking is not likely to be repeated.

Companies will also likely start to unwind at least some of that inventory in the quarters ahead, which could drag overall 2022 GDP, especially if consumer spending also drops off. And investors are more closely tracking consumer behavior as inflation continues to rise.

With consumer spending accounting for about 70% of the U.S. economy, any signs that belts are tightening or moods are getting overly pessimistic will likely set off some alarm bells.

Data to watch

Turning to next week, it will be another busy one for both key economic data as well as earnings. The main economic data highlight will be the January Employment Situation on Friday. Other key data includes ISM Manufacturing, Construction Spending, and the JOLTS report on Tuesday; ADP’s private payrolls report on Wednesday; Productivity & Costs, Factory Orders, and the ISM Non-Manufacturing Index on Thursday.

Earnings wise, results are due from NXP Semiconductor and Trane on Monday; Advanced Micro Devices, Alphabet, Amgen, Chubb, Electronic Arts, Exxon, General Motors, Gilead Sciences, Match Group, PayPal, Sirius XM, Starbucks, and UPS on Tuesday; AbbVie, Aflac, Allstate, Boston Scientific, CNH, Corteva, D.R. Horton, Ferrari, Humana, Johnson Controls, Meta (Facebook), MetLife, Novartis, Novo Nordisk, Qualcomm, Siemens, Thermo Fisher, TMobile, and Waste Management on Wednesday; Activision Blizzard, Amazon, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, Snap, SnapOn, Wynn Resorts, and Xylem on Thursday; and BristolMyersSquibb, CBOE, Phillips 66, Regeneron, and Sanofi on Friday.

Bottom line, brace for another huge week of extreme volatility.

Ford Wants to Double the Production of its Electric F-150 Lightning Pickup

Ford Motors is looking to boost the production of its electric vehicles and compete with industry leaders like Tesla.

Ford to Boost F-150 Production

Ford Motors announced earlier today that it plans to double the annual production capacity of its upcoming electric F-150 pickup. Currently, the company manufactures less than 100,000 of the pickups but wants to boost production to 150,000 by 2023.

Kumar Galhotra, Ford president of the Americas & international markets, told CNBC earlier today that the reception of the electric F-150 vehicle has been absolutely incredible. As a result, the car manufacturer intends to boost its production and make it available to more people.

The increase in the production of the electric F-150 by Ford shows the company’s desire to boost its presence in the electric vehicle sector. Tesla remains the industry leader, but Ford wants to provide stiff competition in the growing sector.

Ford’s production plans came after the company began to take orders again for its vehicles. The company had previously halted production at multiple factories due to the Coronavirus pandemic.

Ford is also spending big on modernizing some of its auto plants. Thus, showing the desire to become one of the biggest players in the electric vehicle sector.

Ford’s Stock Price Rallies by Over 11%

The shares of Ford are up by more than 11% since the US market opened a few hours ago. At press time, F is trading at $24.15, up by 11.03% over the past 24 hours. F has outperformed numerous auto manufacturing stocks over the past few months.

In 2021, Ford’s stock value rose by more than 180%, performing better than the likes of Tesla. Bank of America’s Securities analyst John Murphy increased Ford’s price target from $22 per share to $26.

Ford joins other car manufacturers like General Motors in expanding their presence in the electric vehicle sector.

Why Ford Stock Is Up By 9% Today

Ford Stock Rallies As Company Highlights Strong Demand For F-150 Lightning

Shares of Ford gained strong upside momentum after Ford reported that it would “nearly double all-electric F-150 Lightning production to 150,000 units annually”.

Ford also noted that it already had nearly 200,000 reservations for the vehicle, so the demand for F-150 Lightning is very strong. Ford added that more than 75% of reservation holders were new to the brand, which means that Ford may be gaining market share from its competitors.

Interestingly, the market looks concerned about Ford’s impact on the EV leader Tesla, whose shares are down by 4% today. Yesterday, Tesla stock rallied after the company released its Q4 production & deliveries report which exceeded market expectations. However, Tesla trades at an extremely rich valuation so the stock is sensitive to any material news about the success of its competitors.

What’s Next For Ford Stock?

Unlike Tesla, Ford is trading at reasonable valuation levels. Analysts expect that the company will report earnings of $1.99 per share in 2022, so Ford stock is trading at 12 forward P/E compared to 136 forward P/E for Tesla stock.

In this light, Ford stock may attract more value-oriented traders who are willing to bet on the strong growth of the EV segment but are not ready to buy stocks which are valued at more than 100 forward P/E.

For Tesla investors, Ford story is the one to watch closely as Ford may establish itself at the top position of the lucrative EV truck market segment, which may have a negative impact on the valuation of Tesla stock.

It should be noted that traders look interested in stocks of legacy automakers, so shares of General Motors have also enjoyed a strong rally in recent weeks. It remains to be seen whether it will be a “year of the legacy automaker” on the stock market, but it is possible that higher yields will push traders towards value stocks, which will be bullish for Ford and General Motors.

For a look at all of today’s economic events, check out our economic calendar.

Sector Themes In Play In The Markets For 2022

Years like 2021 saw a solid broad-based performance in many stock market sectors. Relatively simple approaches such as Indexing and Sector Rotation did well. But with macro changes in play and many uncertainties for 2022, we may very well see broad indexes underperforming while individual sectors dominated by a few stocks really shine.

Dips will continue to be bought unless something significant changes. But let’s not forget that we’re long overdue for a substantial correction. Significant risk catalysts are:

  • Fed actions.
  • International conflicts (i.e., Russia and China).
  • Pandemic developments that are not currently known.

There’s always the risk of the unknown – the literal definition of a “Black Swan” event. We shouldn’t get too complacent, knowing that we may need to get defensive to protect capital suddenly. When it’s time to be defensive, let’s not forget that CASH IS A POSITION!

Sector theme DRIVERS FOR 2022

Many uncertainties about Covid and the lingering effects on the economy remain. Inflation has roared back to 30-year highs. Strong employment numbers and consumer spending are fueling significant growth in corporate earnings. We also have a shift in bias at the Fed on interest rates and quantitative easing. These are the “knowns” and are theoretically priced in.

For these reasons and more, we should expect more of a “Stockpicker’s Market” in 2022. Certain sectors will do well and weather corrections better than the broader markets.

Even short-term traders can gain an edge by paying attention to what sectors are strongest. Traders tend to benefit most from playing the strongest stocks in the strongest sectors for bullish trades and choosing the weakest stocks in weaker sectors for bearish trades. That “tailwind” can make a significant difference in results.

Let’s look at some sector themes and individual names to keep an eye on in 2022.

ECONOMIC NORMALIZATION

A long-anticipated return to a “normal” economy will continue to be a theme — we just don’t know if that will be Post-Covid or Co-Covid. Or when. Air travel, theme parks, hotels, cruise lines, etc., have all suffered in the persistent Pandemic. What does seem to be changing is the idea of a “new normal” where virus variants may be with us for years to come. We will adjust socially and economically to that for the foreseeable future. DAL, UAL, LUV, AAL are airlines to watch, and the JETS ETF may be a good way to play a general recovery in this sector.

5G INTERNET

The much-hyped rollout of 5G network technology had its share of setbacks and technology disappointments. But 2022 should see the 5G deployment start to take off as technical issues are worked out, and the promise of widespread coverage with transformational performance becomes real. In the background supplying the 5G infrastructure are AMD, QCOM, ADI, MRVL, AMT, XLNX, and KEYS. Along with infrastructure and testing companies, shares of major carriers T, TMUS, and VZ languished for much of the second half of 2021 and looked poised for recovery in the coming year.

ARTIFICIAL INTELLIGENCE

In all its various forms (including autonomous vehicles), AI will remain a developing trend. Big players in the space to watch include MSFT, AMAT, GOOGL, NVDA, AAPL, and QCOM.

EVs and AUTONOMOUS VEHICLES

Electric Vehicles (EVs) are nearing an inflection point where widespread adoption is poised to take off. Technology and cost competitiveness has improved where some EVs will reach price parity with their traditional internal combustion counterparts.

While there are many smaller players in the EV space, automotive stalwarts F, GM, and TM are investing very heavily. TSLA has been grabbing the headlines, but many others want to stake out their territory in the space, including whole tiers of manufacturers and infrastructure enablers like WKHS, XPEV, NKLA, and CHPT.

MATERIALS and MINING

Gold, silver, and related miners underperformed for much of 2021 and now look poised for a recovery year as inflation, and monetary concerns grow. GLD, SLV, GDX, GDXJ, SIL, SILJ look good as both longer and mid-term plays. Metals and miners may get hit initially with a significant downturn in stocks but could ultimately demonstrate their safe-haven potential.

Specific to the growth in EVs, battery technology, etc., copper, lithium, and related basic materials should see stronger demand ahead. FCX looks particularly interesting as a dual play on gold and copper. LIT may be a good ETF play on lithium battery technology.

SEMICONDUCTORS

The market for chips is primed for exponential growth. EV’s have about ten times the number of specialty semiconductors as conventional vehicles. AI, crypto, 5G, mobile devices, and ubiquitous computing should drive growth in the semiconductor sector for some time to come.

REAL ESTATE

Real Estate and Homebuilders should continue to do well while employment numbers remain strong and if interest rates don’t rise too quickly. The inventory shortage in most real estate markets will likely persist well into the new year.

Storage REITs like PSA, LSI, and CUBE have been big winners in the Covid economy and still have room to run.

SUMMARY

Many sectors still look bullish after gains in 2021. But there are “storm clouds” on the horizon, and we must not take future performance for granted.

Lastly, one of the simplest ways to assess how sectors are measuring up is to watch the charts for the S&P SPDR series sector ETFs and a few others. Here are some notable ones to watch:

https://www.thetechnicaltraders.com/wp-content/uploads/2021/12/Dec-31-article.png

These can give us a good starting place to look for leading stocks in winning sectors as the year unfolds.

Let’s remain vigilant for possible market corrections and may the wind be at our backs!

Want to learn more about our Options Trading Service?

Every day on Options Trading Signals, we do defined risk trades that protect us from black swan events 24/7. Many may think that is what stop losses are for. Well, remember the markets are only open about 1/3 of the hours in a day. Therefore, a stop loss only protects you for 1/3 of each day. Stocks can gap up or down. With options, you are always protected because we do defined risk in a spread. We cover with multiple legs, which are always on once you own.

If you are new to trading or have been trading stock but are interested in options, you can find more information at The Technical Traders – Options Trading Signals Service. The head Options Trading Specialist Brian Benson, who has been trading options for almost 20 years, sends out real live trade alerts on actual trades, such as TSLA and NVDA, with real money. Ready to check it out, click here: TheTechnicalTraders.com.

Enjoy your day!

Chris Vermeulen
Founder & Chief Market Strategist
TheTechnicalTraders.com

 

Why Rivian Automotive Stock Is Set To Rally Today

Rivian Automotive Prices IPO Above Expected Range

Rivian Automotive priced its IPO at $78/share, so the company enters the marketplace with a valuation of $66.5 billion. In comparison, Ford is valued at $81 billion while General Motors has an $85 billion market cap. Previously, Rivian was expected to price its IPO at $72 – $74. It should be noted that premarket indications show that Rivian stock could open above the $120 level.

The company will raise $11.9 billion from the IPO, and it will have a lot of money to invest in its business. Traders and investors look ready to pay a major premium for the shares of the electric vehicle startup as they do not want to miss a high-growth story in a market that is trading near all-time high levels.

It should be noted that Rivian is supported by Amazon, which owns a roughly 20% stake in the company. Clearly, Amazon’s involvement serves as a material upside catalyst for Rivian shares as Amazon has the ambition to compete with Tesla in the EV market.

What’s Next For Rivian Stock?

The expected price range for Rivian’s IPO has been raised several times which highlights the strength of demand for the company’s stock.

There’s a lot of buzz around Rivian, and the stock has a decent opportunity to gain upside momentum in the upcoming trading sessions as many retail traders will likely rush to get a piece of another hot electric vehicle stock.

At this point, it’s too early to talk whether the valuation at IPO is justified, and the near-term direction of Rivian stock will depend solely on market sentiment.

The recent rally in Tesla shares showed that traders and investors are ready to pay a huge premium over stocks of traditional automakers, and Rivian stock will have an opportunity to ride the wave of investor enthusiasm. Traders should be prepared for fast moves as the stock will certainly experience elevated volatility in the next few weeks.

For a look at all of today’s economic events, check out our economic calendar.

Tesla Vehicle Deliveries Hit Another Record in Q3, Beats Analysts’ Estimates

Tesla has weathered the chip crisis better than rivals, with its overall deliveries surging 20% in the July to September period from its previous record in the second quarter, marking the sixth consecutive quarter-on-quarter gains. .

In China, rising exports to Europe and the introduction of a cheaper Model Y helped boost Tesla’s production, analysts said.

Musk said Tesla suffered an extremely severe parts shortage earlier in the third quarter and had urged employees to make quarter-end delivery push, Reuters reported last month, citing an internal company email.

“The end of quarter delivery wave is unusually high this time,” he said in the email.

Tesla delivered 241,300 vehicles globally in the July to September quarter, up 73% from a year earlier. Analysts had expected the electric-car maker to deliver 229,242 vehicles, according to Refinitiv data.

General Motors, Honda and some of its bigger rivals posted declines in U.S. sales in the third quarter, hit by a prolonged chip shortage. GM’s third-quarter U.S. sales fell nearly 33% to its lowest level in more than a decade.

Tesla said it delivered 232,025 of its Model 3 compact cars and Model Y sport-utility vehicles and 9,275 of its flagship Model S and Model X cars to customers in the quarter.

Total production in the third quarter rose over 15% to 237,823 vehicles from the prior quarter.

CHINA

Gary Black, portfolio manager at the Future Fund and a Tesla bull, said that Tesla’s deliveries were driven by record deliveries in China, which was “putting to rest any notion China demand is slowing.”

Tesla faces scrutiny from both regulators and the public and growing competition from local rivals.

Tesla has not released its September China sales yet, and in August, its Shanghai factory exported more than two thirds of its vehicles to Europe and Asian countries.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Juby Babu and Nivedita Balu in Bengaluru and Hyunjoo Jin in SAN FRANCISCO Editing by Marguerita Choy)

GM to Cut North American Production, Citing Chip Shortage

The largest U.S. automaker will halt production next week at its Fort Wayne plant in Indiana and its Silao plant in Mexico, both of which build pickup trucks. In total, GM is cutting production at eight North American assembly plants in September.

The industry-wide chip shortage is causing massive auto production cuts around the globe and auto industry officials say the problem is getting worse.

GM shares were largely unchanged in late trading Thursday.

Earlier this week, Ford Motor Co said it will also cut truck production next week because of the chips shortage and said its August U.S. sales were down 33% on the chip shortage. Toyota Motor Corp said last month it will slash global production for September by 40% from its previous plan.

GM will halt production at its Wentzville, Missouri plant for two weeks starting Sept. 6 that builds midsize trucks and full-size vans. GM will also halt production at the CAMI Assembly in Canada and San Luis Potosi Assembly in Mexico for two additional weeks. The company builds its Equinox SUV at both plants.

The automaker is also idling production for two additional weeks at its Lansing Delta Township plant that builds the Chevrolet Traverse and the Buick Enclave.

GM will cut two weeks of production in September at the Spring Hill Tennessee plant that builds the GMC Acadia, Cadillac XT5 and Cadillac XT6. Its Ramos, Mexico plant will take two additional weeks of downtime for Blazer production, while Equinox production will be down through the week of Sept. 27.

Production of the Equinox has been down since Aug. 16.

Democratic Senator Mark Warner said the “continuing impact of the chip shortage – epitomized most recently in the news that GM will be forced to idle plants across North America – speaks to the urgency of passing bipartisan legislation to fund new semiconductor production in the United States.”

GM said during production downtime it will repair and ship unfinished vehicles from many impacted plants, including Fort Wayne and Silao.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by David ShepardsonEditing by David Evans and Chizu Nomiyama)

Why General Motors Stock Is Down By 3% Today

General Motors Stock Declines As Company Expands Chevrolet Bolt EV Recall

Shares of General Motors remain under pressure after the company stated that it would expand the recall of its Chevrolet Bolt electric vehicles due to the risk of fire from the battery pack. This recall would cost as much as $1 billion. The previous recall costed $800 million, so battery-related problems are projected to cost $1.8 billion.

General Motors stock gained downside momentum at the start of this month after the company’s earnings guidance missed analyst estimates. The new $1 billion blow has already put material pressure on the company’s shares, and the market will likely remain focused on the EV recall and global chip shortage in the upcoming weeks.

What’s Next For General Motors Stock?

Analyst estimates have trended down in recent weeks, which is not surprising as the company has reduced its adjusted earnings guidance to $5.40 – $6.40 per share for the full year 2021. Currently, analyst consensus calls for earnings of $6.33 per share in 2021 which is close to the high end of the company’s guidance, but it is clear that earnings estimates will continue to decline.

In 2022, General Motors is projected to report earnings of $6.93 per share, so the stock is trading at forward P/E of less than 7. However, earnings estimates may move lower in the upcoming weeks, which is often bearish for a stock.

At this point, General Motors stock needs upside catalysts to break the current downside trend. Otherwise, the market will remain focused on the company’s problems with the battery pack and the global ship shortage which hurts all automakers.

It remains to be seen whether value-oriented investors will be ready to increase purchases of General Motors stock after the recent pullback. Current valuation levels look cheap but earnings estimates may move lower, and the stock needs additional positive catalysts to gain upside momentum.

For a look at all of today’s economic events, check out our economic calendar.

General Motors Earnings Could Beat Q2 Estimates; Target Price $74

General Motors, an American multinational corporation that was the world’s largest motor-vehicle manufacturer in the 20th century, is expected to report earnings of $2.23 per share in the second quarter, representing a year-over-year increase of over 540% from a loss of $0.50 per share a year ago.

The Detroit, Michigan-based auto manufacturer would also post revenue growth of about 73% to $29 billion. According to ZACKS Research, the company has beaten earnings per share (EPS) estimates in all of the last four quarters.

General Motors stock closed 1.49% higher at $57.88 on Tuesday. The shares have gained 39% so far this year.

Analyst Comments

“We expect General Motors (GM) to beat the consensus estimates for revenues but fall slightly short on earnings. The company has reported better than expected earnings figures in each of the last four quarters while revenue was better than market estimates in two of the last four quarters,” noted analysts at Trefis.

“In the past year and a half, the company was affected due to various lockdowns across the world due to the pandemic. The Automotive sector is currently also affected by the global shortage of semiconductor chips which is affecting production across the world. Our forecast indicates that GM’s valuation is $70 per share, which is 26% above the current market price of $55.”

General Motors Stock Price Forecast

Fifteen analysts who offered stock ratings for General Motors in the last three months forecast the average price in 12 months of $74.73 with a high forecast of $90.00 and a low forecast of $60.00.

The average price target represents a 29.11% change from the last price of $57.88. From those 15 analysts, 14 rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $80 with a high of $120 under a bull scenario and $32 under the worst-case scenario. The firm gave an “Overweight” rating to the motor-vehicle manufacturer’s stock.

“We are OW based on GM’s diversified portfolio, with multiple ways for General Motors (GM) to enhance shareholder value, through: EVs, ICE and Autonomy. GM also has leading North American margins, generates strong cash flow, and has a robust balance sheet,” noted Adam Jonas, equity analyst at Morgan Stanley.

“We believe that the market is underestimating the SOTP of the GM enterprise via: 1) Legacy ICE, 2) GM EV, 3) GM’s Ultium Battery business, 4) China JVs, 5) GM Finco, 6) GM Cruise, 7) hidden franchise value in brands such as Corvette and 8) GM Connected Services. GM management has a proven track record to allocate capital away from structurally challenged areas towards re-positioning the business model.”

Several other analysts have also updated their stock outlook. RBC raised the stock price forecast to $77 from $72. BofA lifted the price objective to $90 from $80. UBS upped the target price to $79 from $75.

General Motors Could Hit New All-Time High on Strong Q1 Earnings; Target Price $69

General Motors, the largest US-based automaker, is expected to report its first-quarter earnings of $1.02 per share, which represents year-over-year growth of over 64% from $0.62 per share seen in the same quarter a year ago.

The Detroit, Michigan-based company would post revenue growth of about 2% to around $33.3 billion.

General Motors’s better-than-expected results, which will be announced on Wednesday, May 5, would help the stock hit new all-time highs. General Motors shares rose over 37% so far this year. The stock traded nearly flat at $57.35 on Monday.

General Motors Stock Price Forecast

Twelve analysts who offered stock ratings for General Motors in the last three months forecast the average price in 12 months of $69.42 with a high forecast of $85.00 and a low forecast of $62.00.

The average price target represents a 20.81% increase from the last price of $57.46. Of those 12 analysts, 11 rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $80 with a high of $120 under a bull scenario and $32 under the worst-case scenario. The firm gave an “Overweight” rating on the auto manufacturer’s stock.

Several other analysts have also updated their stock outlook. Credit Suisse raised the target price to $72 from $68. BofA lifted the price objective to $80 from $72. UBS increased the target price to $75 from $50. Daiwa Capital Markets upped the price target to $67 from $60. Jefferies raised the target price to $62 from $50.

Analyst Comments

“We are OW based on General Motors’ (GM) diversified portfolio, with multiple ways for GM to enhance shareholder value, through: EVs, ICE and Autonomy. GM also has leading North American margins, generates strong cash flow, and has a robust balance sheet,” noted Adam Jonas, equity analyst at Morgan Stanley.

“We believe that the market is underestimating the SOTP of the GM enterprise via: 1) Legacy ICE, 2) GM EV, 3) GM’s Ultium Battery business, 4) China JVs, 5) GM Finco, 6) GM Cruise, 7) hidden franchise value in brands such as Corvette and 8) GM Connected Services. GM management has a proven track record to allocate capital away from structurally challenged areas towards re-positioning the business model.”

Check out FX Empire’s earnings calendar

Capitalizing on IPO Mania: Will Stripe’s IPO Become The Biggest of All-Time?

Boosted by huge demand for technology and sustainability stocks, as well as a frenzied rush from blank-check SPAC companies, the volume of IPOs in the US doubled to 494 – raising a collective $174 billion. Now, with the news of payments giants Stripe intending to go public, we may see the biggest initial public offering yet.

According to FactSet, high profile IPOs from Snowflake, Airbnb and Rocket Companies were well received by investors, contributing to 150% year-on-year growth for money raised through offerings.

However, one company that’s seemingly been at the centre of speculation throughout 2020 without pulling the trigger on an IPO was Stripe. In August last year, Stripe sparked a furore when the company announced that it had recruited CFO Dhivya Suryadevara from General Motors to assume the same role at the startup. At the time, it was anticipated that the company was in the final stages of preparing to go public. But instead, the company opted to raise an additional $600 million in new equity from private investors at a seismic valuation of $95 billion.

At a valuation of $95bn, Stripe has become the most valuable US startup, pushing past huge industry players like Elon Musk’s SpaceX and grocery delivery service Instacart. However, the latest fundraising effort could lead the company to the biggest IPO ever.

Entering The IPO Frenzy

Stripe’s push towards an IPO comes at a time when a global IPO frenzy is in full swing. At the end of Q1 in 2021, global dealmaking stood at $1.4 trillion thanks to blank-check SPACs and newfound excitement for tech initial public offerings.

These figures represent a 103% increase in the same period last year, and a faster start to a year in over two decades – according to preliminary data from Dealogic. There’s no sign of the furore simmering down, either.

One of the key reasons behind such astronomical figures stems from the boom in special-purpose acquisition companies (SPACs), which offer private companies a faster route into public markets. SPACs have helped to push equity capital market fees up by almost 340% compared to the same period in 2020 to a total of $13.1 billion – more than double the revenues in any first quarter over the past 20 years.

(Image: Financial Times)

As the data above shows, IPO proceeds already soared to levels that haven’t been seen since the financial crisis of 2008 by the end of last year. Driven largely by unprecedented volumes of SPACs entering the market, more businesses feel emboldened to embrace the huge boom in IPO popularity.

Will Stripe Become the World’s Biggest IPO?

So, will Stripe use the current investment landscape to launch the biggest IPO ever? There are a few things to consider before we can gain a clearer idea of just how seismic the company’s arrival on the New York Stock Exchange will be. Firstly, it’s important to note that these metrics are largely determined by total deal size, rather than the company’s market capitalization. The current biggest IPO belongs to that of Saudi Aramco, which raised $29.4 billion through a home-country listing. Meanwhile, the biggest US-based initial public offering was the 2014 debut of Alibaba, which ultimately raised a total of $25 billion.

Weighing in with a $95 billion valuation means that Stripe has the potential for a huge IPO, but it remains to be seen that the company will beat the aforementioned records at its current valuation. Companies typically avoid releasing too many shares during an IPO as they can pursue follow-on offerings for insiders once the lockup period is over – which tends to be around 90 to 180 days after the initial public offering date.

Although holding the record for the largest IPO will no doubt hold plenty of appeal for the company, it’s unlikely that Stripe would willingly sell almost one-third of its shares for the sake of beating the existing stock market record – but this doesn’t mean that the company should be discounted. Stripe appears to be investing on a global scale and is producing results that have captured the imagination of institutional investors that have been willing to pay way over the odds for admission just one year on from the company’s last fundraising effort. With palpable excitement for both Stripe and the IPO market as a whole, all bets are off when it comes to anticipating the sheer scale of the upcoming floatation.

Buying Stripe’s IPO

With speculation rife about the ultimate size of Stripe’s IPO, many retail investors will likely find the notion of investing in the payments company a tantalizing one to say the least. However, the process of investing in initial public offerings can be tricky for individuals to buy into. This is because many companies choose to sell their shares to institutional investors who are capable of buying huge volumes of their IPO in one single transaction.

Maxim Manturov, Head of Investment Research at Freedom Finance Europe, says that: “Historically, institutional investors get around 90% of all shares, with only around 10% left for retail trades. This is where allocation comes from: when the demand is high, the broker will have to reduce order amounts so as to at least partially fill all of them. The allocation ratio, meanwhile, depends on the investor trading activity and volume.”

That said, there’s still a way for the general public to participate in IPOs – there’re online brokers that allow retail investors to take part in IPOs. However, there’s generally a vetting process to go through and a financial threshold to meet.

However, retail investors can still get in on the action when trading eventually begins on the New York Stock Exchange. In an IPO landscape that’s filled with huge levels of investor confidence, we may yet see Stripe’s initial public offering break plenty of records upon its arrival.

GM Builds Pickups Without Certain Modules Due to Global Chip Shortage, Hurting Fuel Economy

By Ben Klayman

DETROIT (Reuters) – General Motors Co said on Monday that due to the global semiconductor chip shortage the U.S. automaker is building certain 2021 light-duty full-size pickup trucks without a fuel management module, hurting those vehicles’ fuel economy performance.

The lack of the active fuel management/dynamic fuel management module means affected models, equipped with the 5.3-liter EcoTec3 V8 engine with both six-speed and eight-speed automatic transmission, will have lower fuel economy by one mile per gallon, spokeswoman Michelle Malcho said.

Malcho emphasized all trucks are still being built, something GM has repeatedly stressed it would try to protect as pickups are among GM’s most profitable models. She declined to say the volume of vehicles affected.

“By taking this measure, we are better able to meet the strong customer and dealer demand for our full-size trucks as the industry continues to rebound and strengthen,” Malcho wrote in an email.

The change runs through the 2021 model year, which typically ends in late summer or early fall, she said.

Malcho said it would not have a major impact on the Detroit automaker’s U.S. corporate average fuel economy (CAFE) numbers.

“We routinely monitor our fleet for compliance in the U.S. and Canada, and we balance our portfolio in a way that enables us to manage unforeseeable circumstances like this without compromising our overall (greenhouse gas) and fuel economy compliance,” she said.

GM’s fleetwide fuel economy in the 2018 model year was 22.5 miles per gallon and was projected to rise to 22.8 mpg for 2019, according to a report by the Environmental Protection Agency.

To meet federal CAFE requirements, automakers like GM often use credits from either earlier years where they faced less stringent rules and performed better than the requirements or buy credits from other automakers.

GM said last month the chip shortage could shave up to $2 billion from this year’s earnings. It subsequently said it expected global chip supplies to return to normal rates by the second half of the year.

GM’s U.S. rival Ford Motor Co previously said the shortage could hurt 2021 profits by up to $2.5 billion and said it had curtailed production of its flagship F-150 pickup.

The shortage, which has hit automakers globally, stems from a confluence of factors as carmakers, which shut plants for two months during the COVID-19 pandemic last year, compete with the sprawling consumer electronics industry for chip supplies.

Also on Monday, BMW Chief Technology Officer Frank Weber said things will be tough in the short term.

“We hope that this situation is going to improve as we get closer to summer,” he told reporters. “But April and May we expect will be very tough. Predictions, I cannot make because really we are working from week to week. So far we have been very successful and we have not lost a single day in production.”

GM shares were down 2% in midday trading.

 

(Reporting by Ben Klayman in Detroit, additional reporting by David Shepardson in Washington and Nick Carey in London; Editing by Nick Zieminski and Jonathan Oatis)

tagreuters.com2021binary_LYNXMPEH2E12R-VIEWIMAGE