Ford Motor Tops SP-500 Performance List

Ford Motor Co. (F) has surged to a 20-year high in the first week of 2022, joining rivals Tesla Inc. (TSLA) and General Motors Co. (GM) in the momentum wave generated by the electric vehicle revolution. It now stands atop the SP-500 performance list for the first time this century, marking the next step in restoring its diminished reputation. However, the rally seems premature, with December U.S. sales dropping 17.1% year-over-year from 2020’s depressed levels.

Industry-Leading Fourth Quarter

Admittedly, Ford was also America’s best-selling automaker in the fourth quarter, with 508,451 vehicles marking a 16.8% increase over the third quarter. Overall industry sales fell about 3% in the quarter, yielding a strongly bullish divergence that highlights growing interest in the company’s new product line. EV sales contributed to this sales burst, growing 36% faster than the broad segment in 2021 while hitting December and full-year sales records, with 121% annual growth.

The all-electric F-150 pickup is capturing consumer and Wall Street attention, with Ford announcing this week it will double production due to strong demand. The company had shut down reservations for the truck to deal with an “overwhelming response” and has now started to accept purchase orders once again. In addition, customers who already placed reservations will receive invitations to convert those requests into actual orders.

Wall Street and Technical Outlook

Wall Street consensus has deteriorated in the last 12 months, now standing at a ‘Moderate Buy’ rating based upon 11 ‘Buy’, 2 ‘Overweight’, 6 ‘Hold’, 1 ‘Underweight’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $12 to a Street-high $26 while the stock is set to open Thursday’s session less than $3 below the high target. This lofty placement suggests recent gains are unsustainable, which makes sense with industry sales still below pre-pandemic levels.

Ford topped out in the mid-teens in 2013 and entered a steep downtrend that hit an 11-year low in March 2020. The subsequent uptick reached 20-year horizontal resistance in the upper teens in November 2021 and broke out, stretching in a straight line into the mid-20s. This price level marks strong resistance at the .618 Fibonacci retracement level of the 1999 into 2008 downtrend, raising odds for a long overdue reversal and pullback that tests new support.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

General Motors Invests in Electric Boating Start-Up Pure Watercraft

An increasing number of companies are entering the electric transportation sector as world leaders intensify their efforts towards climate change.

GM Buys 25% Stake in Pure Watercraft

General Motors, one of the leading automobile manufacturers in the United States, announced that it had acquired a 25% stake in Pure Watercraft, a Seattle start-up that manufactures electric outboard motors for boats.

Pure Watercraft CEO Andy Rebele told CNBC earlier today that “The boating market is growing like it hasn’t since post-World War II. During the pandemic, people wanted to do things with their families, with their pods. Going out on the water is one of the ideal things to do.”

The company utilizes lithium-ion batteries, replacing about 40- to 50-horsepower outboard motors that burn gas or diesel. Pure Watercraft’s systems are much quieter and cleaner compared to the traditional boats that contribute to environmental problems, including noise pollution, smog, and water pollution.

Rebele said the electric board industry is set to grow even bigger over the coming years as more people adopt greener means of transportation.

GM to Expand its Presence in the Electric Transport Sector

General Motors is one of the companies that has made a commitment to become all-electric. The company announced its plans to go all-electric earlier this year, and investments such as Pure Watercraft would increase the company’s presence in the emerging sector.

GM stock chart. Source: FXEMPIRE

GM CEO Mary Barra pointed out last month that the company is interested in marine electric transportation.  GM is set to become a supplier of components to Pure Watercraft and will help with the engineering, design and manufacturing of the boats.

GM’s stock is up by more than 4% since the company announced this latest development. At press time, GM is trading at $64.06 per share and could rally higher over the coming weeks. Since the start of the year, GM has added more than 53% to its value, making it one of the best performers in the automobile sector.

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 Price Prediction: A Blow-off Top Followed by Epic Collapse

  • Hertz Announced an initial order of 100,000 Tesla’s to be filled by year-end 2022.
  • Tesla skyrocketed from a $913-billion market cap (October 22, 2021) to $1.21 trillion.
  • The bullish response added $300 billion, implying a $3-million price tag per vehicle ordered (not sold).

Tesla Daily Chart

Tesla shares skyrocketed above $1000 on the Hertz announcement. Tesla is now worth more than all the auto manufacturers combined. More on that later.

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Tesla Market Cap

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https://ycharts.com/companies/TSLA/market_cap

Gross Profit

Let’s say Tesla makes a generous $20,000 profit per vehicle ($20,000 X 100,000). That indicates a gross profit of $2 billion, far shy of the $300-billion increase. What is going on here?

Ford Motor Company

By comparison, Ford Motor Company currently sports a $72-billion market cap, so Tesla adding $300 billion in market cap is like adding four (4) Ford Motor Companies.

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https://ycharts.com/companies/F/market_cap

Major Auto Companies by Market Cap

Below is a quick rundown of all major auto manufacturers by current market cap. Tesla is worth more than all and sells less than 1% of the vehicles.

With a market cap of $1.21 trillion, TSLA is trading at a 25% premium above all auto manufacturers on the planet!

Tesla looks, acts, and smells like a bubble. The question is…when will it pop?

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For regular updates, please visit here, or follow AG on Twitter at https://twitter.com/ag_thorson

General Motors Battered and Bruised After Earnings

General Motors Co. (GM) is trading lower by more than 2% in the first hour of Tuesday’s session after beating Q3 2021 earnings-per-share (EPS) estimates by a wide margin while coming up short on revenue. The automaker posted a profit of $1.52 per-share during the quarter, much higher than $0.98 expectations, while revenue fell 24.5% year-over-year to $26.78 billion, missing consensus by more than $1 billion. Fiscal year 2021 guidance at the high end of prior metrics failed to sway exiting shareholders.

Playing a Numbers Game

Earnings before interest and taxes (EBITDA) hit $2.9 billion and a 10.9% profit margin while well-documented supply chain disruptions undermined income. A one-time settlement in the GM Financial division also boosted the number, making the result less palatable. Fiscal year 2021 EPS guidance between $5.70 and $6.70  feels like a wide range numbers game, with the company expressing more uncertainty than upbeat comments in CEO Mary Barra’s morning interview.

Barra noted on CNBC that trucks and full-sized SUVs are attracting the most buying interest while the company is selling every vehicle they can make, which isn’t surprising given chronic shortages. She also insisted that semiconductor supply will improve in Q1 2021, even though many companies have warned that disruptions could easily last into the second half.  This comment warrants skepticism, given false confidence offered by governments and businesses throughout this crisis,

Wall Street and Technical Outlook

Wall Street consensus has grown overly bullish in recent quarters, yielding a ‘Buy’ rating based upon 21 ‘Buy’, 1 ‘Overweight’, and 3 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions. Price targets currently range from a low of $53 to a street-high $95 while the stock opened Tuesday’s session just $2 above the low target. This dismal placement highlights the failure of analysts to accurately measure the impact of supply disruptions on U.S. corporations.

General Motors failed breakouts above the 2011 high at 38.95 in 2014 and 2017, leaving behind a shallow rising highs trendline. The stock slumped to an all-time low during the pandemic decline and shot higher, returning to trendline resistance at 50 in January 2021. An immediate breakout stalled below 64, giving way to an August support test that attracted willing buyers. It closed two-thirds of the distance to the prior high into this week’s report and has sold off, adding to rangebound action that could last well into the first quarter of 2022.

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

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

How Supply Issues could Influence SP500?

At the same time, many businesses continue to announce plans for further price increases, with most facing higher cost pressures. It will be interesting to see how or when the U.S. consumer starts to pull back.

Upcoming price increases

UPS yesterday was the latest to announce upcoming price increases, joining companies like Kimberley-Clark, Procter & Gamble, Nestlé, and Chipotle, to name just a few that are attempting to offset higher input costs. These moves reinforce the bears argument that inflation will prove to be longer-lasting than the Federal Reserve’s stance that the wave of higher prices is only “transitory.”

Judging from regional Federal Reserve Manufacturing Surveys that have been updated so far, challenges related to supply chain dislocations and labor shortages continue to contribute to the inflationary environment. Meaning manufactures are still struggling to expand output amid raw material shortages, higher input costs, transportation bottlenecks, and a lack of qualified workers. There have been minor improvements with the pace of cost increases easing a bit and respondent outlooks turning more positive.

It will take more than one month of slightly better data for investors to believe the worst of the supply chain mess is behind us, though.

Data to watch today

Economic data today includes advanced reads on Retail and Wholesale Inventories for October. Bulls are hoping inventories have managed to climb from depressed levels brought on by supply chain challenges, especially as we head into the holiday shopping season. Remember, if companies don’t have the products to sell it will be tough to meet earnings and growth forecasts.

Durable Goods Orders for September is also due today. Oil traders today are anxious to see the Energy Information Administration’s weekly oil inventory report after both Brent and WTI oil futures yesterday closed at their highest levels since 2014 when oil was trading close to $100 a barrel.

Investors this morning will also be digesting the Bank of Canada’s latest policy decision. Insiders are expecting the central bank to raise its inflation forecast and further cut its bond purchases. Another reduction will mark the fourth time in the past year that the Bank of Canada has “tapered” its asset purchases, something most other central banks have not yet begun. The Bank of Canada could also announce when it intends to begin interest rate hikes, with some analysts anticipating liftoff as soon as March due to rising inflation.

Such a move could increase fears that other global central banks, including the U.S. Fed, will feel pressured to act more aggressively to combat inflation. Meaning analysts could begin moving up timelines for when the Fed might end asset purchases and begin rate hikes, something that could weigh on bullish outlooks.

Earnings

It’s another busy day for earnings with highlights including BASF, Boeing, Bristol Myers Squibb, CME Group, Coca Cola, eBay, General Motors, Hilton Worldwide, Kraft Heinz, McDonald’s, Norfolk Southern, O’Reilly Automotive, Thermo Fisher, and Twilio. Alphabet (Google) and Microsoft announced after the market close yesterday with both blowing expectations out of the water.

Notably, Google’s advertising revenue, which rose +43%, didn’t appear to take any hits from changes made to Apple’s privacy policies, something cited by both Facebook and Snap. Both Google and Microsoft also saw continued robust growth in their cloud divisions with revenue climbing +45% and +31% respectively. Apple and Amazon will wrap up the the last of the so-called FAAMG stock earnings when they report tomorrow. Stay tuned…

Big Tech Pushing S&P 500… But How Does it End? Amazon, Apple, Facebook, Google, Microsoft and Tesla now make up 24% of the S&P 500. It seems like how they go so goes the overall stock market. Keep in mind, “Big Tech” now makes up about 40% of the entire S&P 500. If the trade finds Big Tech to be overvalued or in some type of bubble the market could take a sizable hit as it deflates.

Best Stocks, Crypto, and ETFs to Watch This Week

Facebook Inc. (FB) has sliced and diced shareholders since September, dropping more than 15% from an all-time high before bouncing strongly at a 19-month trendline on Oct. 12. It jumped more than 20 points off the low into Wednesday of last week and then plummeted after Snap Inc. (SNAP) warned about the revenue impact of new iPhone ad tracking blockers. The stock is back to trendline support, just in time for Monday’s post-market earnings report.

General Motors Corp. (GM) profits have been hurt by persistent supply disruptions so far in 2021, with the automaker forced to idle factories despite the enthusiastic reception of new models and a major commitment to electric vehicles. The stock bounced at an 8-month low in August and closed half the distance back to June’s all-time high in the 60s, before the rally stalled about two-weeks ago. All eyes are now focused squarely on Wednesday’s post-market report and further comments about supply issues.

Dow component Chevron Corp. (CVX) was left for dead in 2020, with the election of an environmentally friendly president heralding in an era of alternative energy. The crude oil futures market promptly took off for the heavens, reacting to political pressure on drilling and production that could trigger worldwide shortages until clean energy can replace fossil fuels, which might take a decade or more. Integrated oil and gas companies reacted slowly to the rally but are now getting bought aggressively and could hit new highs in 2022.

Bitcoin bottomed out at 40,000 in September after dropping nearly 25% and turned sharply higher, heading in a straight line into the April high near 65,000. The digital giant broke out for a single session last week before turning tail in a decline that’s typical when financial instruments test prior highs. The reversal left behind a weekly shooting star candlestick that predicts at least several weeks of relative weakness before the cryptocurrency can successfully break out to new highs.

The Russell-2000 ETF (IWM) more than doubled in price into March 2021 before topping out above 233. Price action since that time has carved a narrow symmetrical triangle that, when taken together with the vertical uptick, has completed a bullish ‘flag at the top of a flagpole’ that predicts a measured move equal to the prior rally. Small caps have just entered their most seasonally favorable time of year, raising odds for a breakout that could last through the first quarter of 2022.

For a look at this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

General Motors Targets Tesla With Ambitious EV Plans

General Motors outlined an aggressive growth plan at its investor day on Wednesday. The automaker is targeting a doubling of its revenue to $280 billion by 2030 while bolstering margins at the same time. GM’s five-year sales average has been $140 billion.

GM CFO Paul Jacobson explained to CNBC that the opportunity for the company involves connected vehicles. This is where the automaker can look to software to diversify its revenue stream in addition to selling vehicles. Jacobson described a $20 billion-25 billion market opportunity in software alone, coupled with its autonomous or driver assistance system and electric vehicles (EVs).

GM is targeting margins in the 12-14% range in the same period driven by the scaling of EVs coupled with falling battery prices. The automaker is also looking to its software business for higher margins in addition to expanding into new segments.

EVs are a major part of GM’s growth plan. The company expects revenue from this division to increase from $10 billion in 2023 to $90 billion each year by the end of the decade. GM says it has “several compelling EVs in high volume segments” in the works. In fact, the traditional automaker says that it will be transitioning to a portfolio mix that is dominated by EV products.

Investors Skeptical

GM’s stock did not rally on the company’s ambitious outlook, and it could be because investors are not convinced that GM can pull it off. The forecast is dependent on markets such as autonomous driving continuing to gain traction so that GM can reach its revenue goals by the end of the decade.

Jacobson maintained that GM is going forward with a “startup mentality” and is confident that customers will dole out $135 per month on software subscriptions. GM is also betting that autonomous driving will catch on sooner than later.

General Motors suspended its dividend during the coronavirus year. Now GM is prioritizing directing its capital expenditures toward its growth initiatives.

Targeting Tesla

With its EV push, GM will be going toe-to-toe with industry leader Tesla. GM will have its work cut out for it, as Tesla has a grip on this industry, with 63% market share in the U.S. EV market.

Tesla holds its shareholder meeting later this week.

Tesla’s Q3 EV Deliveries Soar Even as ARK Unloads Shares

Tesla is in the spotlight as the final quarter of the year gets underway. The period is key for the electric vehicle maker to meet its delivery estimates for 2021. Elon Musk’s company is off to a good start based on third-quarter results.

Tesla announced on Oct. 2 that it delivered 241,300 vehicles in Q3, representing a 73% increase year-over-year and exceeding expectations. Wall Street analysts were looking for 220,900 deliveries. Tesla sales were also up 20% vs. Q2 results.

The results are especially noteworthy considering that most sectors of the economy are experiencing a supply shortage for products such as the chips that are needed to make the vehicles. Tesla manufactured 237,823 vehicles in Q3.

ARK Invest Offloads Tesla Shares

Cathie Wood, who is at the helm of disruptive investment firm ARK Invest, is known for her bullish forecast on the Tesla stock price of $3,000. Nonetheless, she aggressively sold shares last month.

In her most recent selling spree, she offloaded 381,000 shares of the EV maker, bringing the firm’s combined divestment in the stock to more than $600 million in recent days. Wood sold the stock in favor of shares of trading platforms Coinbase and Robinhood, both of which she bought up.

ARK Invest still owns more than $2 billion of Tesla shares.

Auto Industry Dynamics

It is unclear why ARK sold a percentage of its Tesla holdings. Wood in a Twitter thread touted Tesla’s recent deliveries in the face of a supply shortage.

She noted how traditional automaker General Motors recently suffered a roughly 33% decline in US sales, which it attributed to chip shortages. Meanwhile, Wood pointed out, EVs command between three and five times more chips, and yet Tesla experienced no such setback.

The ARK Invest chief believes it is entirely possible that “chip supplies loosen up considerably,” reversing the issue from a shortage to a glut amid weakening demand for traditional vehicles. She said there are signs that “chip supply constraints are easing,” pointing to comments from industry leaders including Elon Musk.

Source: Twitter

Wood also predicts that EV prices are poised to move below those of traditional autos in comparable categories. She says this will pressure the gas-powered automakers to move more toward an EV model.

General Motor’s Third Quarter Sales Dip Due to Massive Chip Shortage

General Motors has experienced a decline in its sales for the third quarter as the automobile industry continues to experience a shortage of chips.

General Motors Experiences A Dip In Sales

General Motors, one of the leading automobile manufacturers in the world, has revealed that its sales in the third quarter of the year have reduced. The automobile manufacturer said its sales dropped due to the continued chip shortage.

The Detroit automaker said earlier today that it sold roughly 447,000 vehicles from July through September. This represents a 32.8% decline from the same quarter a year ago when the sales dropped due to the Coronavirus pandemic. General Motor’s decline in sales was even higher than the industry analysts’ expectations of 28.9%.

General Motors has been forced to shutter plants for the past few months due to the chip shortage. Like many other automobile manufacturers globally, the company has also been forced to focus on manufacturing vehicles that are in high demand. General Motors has been focusing on its full-size pickup trucks, which have been in high demand in recent months.

GM’s Shares Up By Less Than 1%

This latest development didn’t surprise the market as the company warned its investors last month to expect a decline of roughly 200,000 units in terms of sales volume for the second half of the year.

Despite the decline in sales, General Motors continues to maintain its financial guidance for 2021. General Motors expects its adjusted earnings for the year to be between $11.5 billion and $13.5 billion, or $5.40 to $6.40 a share.

The numbers aren’t looking good for General Motors at the moment. Every General Motors’ brand took a hit in the third quarter in terms of sales, with Chevrolet recording the biggest loss (36.1%)

GM stock chart. Source: FXEMPIRE

Despite that, the shares of General Motors are up by less than 1% today. GM is trading at $52.95 per share, up by 0.5% since the US market opened. GM is also up by 30% since the start of the year despite the continued chip shortage.

The shares of General Motors were trading at $40 each at the start of the year, but they are now trading around $53.

General Motors Bounce Unlikely to Persist

General Motors Co. (GM) hopes to lift weakened investor sentiment on October 6 when the automaker presents its annual two-day Investor’s Day event. The stock has struggled since posting an all-time high at 63.88 in June, giving up more than 25% of its value before bouncing in the upper 40s in late August. Accumulation readings have taken a steep slide during this period, dumping to the lowest lows since October 2020 when GM was trading in the mid-30s.

Supply Shortages Weigh on Profits

Automotive chip shortages are well documented but lasting far longer than overly-optimistic forecasts published in the first quarter of 2021. Many experts now believe that supply shortages and disruptions will persist until at least the second quarter of 2022, forcing GM to idle factories and fail to meet high demand. In fact, just 10 days ago, the company added to scheduled downtime at seven plants in the US, Canada, and Mexico, highlighting this chronic headwind.

Citigroup analyst Itay Michaeli outlined his bullish view ahead of Investor’s Day on Friday, noting, “We continue to regard the upcoming Investor Day as a potential significant positive catalyst for the stock, as we see a number of paths for GM to address key debates and unlock trapped value. We’re also updating our model to reflect GM’s recent reiteration of its 2021 EBIT-adj. guidance range, but with additional headwinds from the recall and semi-shortage, which moves our estimates to the lower-end of GM’s 2021 range”.

Wall Street and Technical Outlook

Ecstatic Wall Street coverage has failed to weigh the long-term impact of shortages, with a consensus ‘Buy’ rating based upon 21 ‘Buy’, 2 ‘Overweight’, and 2 ‘Hold’ recommendations. Price targets currently range from a low of $53 to a Street-high $90 while the stock closed Friday’s session just below the low target. GM has now traded under the low target for six straight weeks, with sidelined investors keeping their powder dry until supplies improve.

General Motors sold off to an all-time low in the mid-teens in March 2020 and turned sharply higher, returning to the 2017 high at 46.78 in January 2021. An immediate breakout added points into June’s all-time high, ahead of a decline that bounced at the prior peak in August. However, the downturn also broke a long-term trendline, establishing a strong barrier in the lower 50s, reinforced by 50-and 200-day moving average resistance. These obstacles will be tough to mount, at least in the short-term, given weak accumulation readings.

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

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Microchip Shortage Is Hitting General Motors Hard As Company Extends Downtime At Several Assemblies

The global shortage of microchips is affecting the operations of numerous vehicle manufacturers, forcing them to make drastic changes to their manufacturing schedules.

General Motors Extends Downtime At Crossover Assemblies

Detroit-based General Motors has announced that it has extended the downtime at several crossover assemblies across the United States. The global shortage of microchips is the major reason why the automobile manufacturer is taking such drastic action.

In a statement yesterday, the automaker said, “These most recent scheduling adjustments are being driven by the continued parts shortages caused by semiconductor supply constraints from international markets experiencing COVID-related restrictions.”

General Motors added that while the situation remains complex and fluid at the moment, it is prioritizing full-size truck production due to their high demand. The automaker said seven of its plants in North America would be fully operational next week. They are; the full-size SUV plant in Arlington, Texas; the GMC Acadia, Cadillac XT5 and XT6 plant in Spring Hill, Tenn; the full-size pickup plants in Flint, Mich., Fort Wayne, Ind., and Silao, Mexico; the Chevrolet Corvette plant in Bowling Green, Ky.; and Fairfax Assembly in Kansas.

Automobile manufacturers would fall short of 9.4 million vehicles this year in terms of production due to the worldwide shortage of microchips. At the moment, they are down by 8.2 million, with North America accounting for 2.6 million so far.

General Motors Is Having Troubles With Its Electric Cars

General Motors has been experiencing certain troubles with its electric vehicle, the Chevrolet Bolt. The company extended the shutdown of its assembly plant that manufactures the Bolt until mid-October due to another safety notice related to the car.

Earlier this week, General Motors had asked Bolt owners to park at least 50 feet from other vehicles inside parking garages because the electric cars could catch fire. The company also said users should not leave their vehicle charging unattended, even if they are using a vehicle charging station in a parking deck.

GM stock chart. Source: FXEMPIRE

The shares of General Motors are up by 0.60% at Friday’s pre-trading session despite the negative news from the company over the past 48 hours. GM is trading at $51.80 per coin and has delivered excellently this year.

GM’s stock price is up by more than 20% year-to-date. It started trading at $41 per share at the beginning of the year, and it is now trading above $51 per share.

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)

Chip Shortage Forces General Motors To Cut North American Vehicle Production Again

General Motors has been in a tight spot in recent months due to a shortage of chips, and the company has now been forced to make another tough decision regarding its operations in North America.

General Motors Reduces North American Vehicle Production

General Motors announced earlier on Thursday that it has significantly cut its vehicle production in North America. A shortage in chips is the major reason why the automobile manufacturer is making this decision.

According to The New York Times, the vehicle manufacturer is extending downtimes at eight of its manufacturing plants in the United States. The company said, “These most recent scheduling adjustments are being driven by the continued parts shortages caused by semiconductor supply constraints from international markets experiencing Covid-19-related restrictions.”

General Motors said it would idle six plans in the region for two weeks in September and two more plans for a week each. The company complained that a global shortage of computer chips is the main reason why these plants would remain idle for most of the month.

The shortage in computer chips had gone on longer than vehicle manufacturers had expected. General Motors and the other leading auto manufacturers had expected the chip shortage to end by the end of the second quarter. However, we are deep into the third quarter, and the situation is no close to ending.

Ford is another company that had been affected by the chip shortage. The company reported a decline in sales in August compared to the same month last year due to the shortage of the chips. Other leading vehicle manufacturers affected by the situation include Chevrolet and GMC. Chevrolet was forced to cut back production of its midsize pickups, vans, and Trailblazer.

GM’s Stock Price Slightly Up Despite The Disappointing News

The shares of General Motors are trading in the green zone despite the statement by the company earlier today. GM is trading at $49.34 per share, up by 0.48% since the market opened a few hours ago.

GM stock chart. Source: FXEMPIRE

Year-to-date, GM is up by more than 20%. GM began 2021 trading at $40 per share but has now rallied and is trading close to $50.

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.

Shares Of General Motors Down By 8% After Missing Earnings Expectations

The shares of General Motors are down by over 8% today after the company missed earnings expectations in the second quarter of 2021.

General Motors Miss Earnings Expectations

Car manufacturer General Motors reported its second-quarter earnings earlier today, and it didn’t perform as analysts had expected. The shares of the company dipped following this announcement despite General Motors raising guidance for the year.

The adjusted earnings per share is $1.97 vs. $2.23 expected. However, General Motor’s revenue surpassed analysts’ expectations. The company generated $34.17 billion in the second quarter of the year compared to the $30.9 billion estimated by analysts.

The second-quarter earnings were negatively affected by the $1.3 billion warranty recall costs, including the $800 million General Motors spent on o the Chevrolet Bolt EV. The electric car has so far been recalled twice over the past year due to fire risks, with the most recent happening last month.

General Motors also raised its adjusted full-year guidance. It currently stands between $11.5 billion and $13.5 billion, or $5.40 to $6.40 per share. The adjusted full-year guidance is up from the previous $10 billion to $11 billion, or $4.50 to $5.25 a share.

GM’s Shares Down By 8%

The Shares of General Motors are down by over 8% since the company reported its Q2 earnings. At the time of this writing, GM is trading at $53.01 per share. Year-to-date, GM’s shares are up by over 20%. It started in 2021 trading at $41 per share, but it is now trading at $53.

GM stock chart. Source: FXEMPIRE

The automaker expects to manufacture roughly 100,000 fewer vehicles in North America in the second half of 2021 compared to H1. General Motor’s financials have improved in recent months. The unadjusted net income was $2.8 billion for Q2 compared with a loss of $758 million in the same period last year. Furthermore, General Motors reported adjusted pretax earnings of $4.1 billion for Q2, up from a loss of $536 million a year earlier.

Why General Motors Stock Is Down By 8% Today

General Motors’ Stock Declines As Earnings Guidance Misses Analyst Estimates

Shares of General Motors gained strong downside momentum after the company released its second-quarter results. General Motors reported revenue of $34.2 billion and GAAP earnings of $1.90 per share, easily beating analyst estimates on both earnings and revenue.

For the full-year 2021, the company expects to report earnings GAAP earnings of $5.12 – $6.12 per share. On an adjusted basis, General Motors projects to report a profit of $5.40 – $6.40 per share, and the company’s expectations are lower than analyst estimates.

General Motors stated that it should have a strong second half of the year despite risks posed by the coronavirus pandemic and global chip shortage. However, the market focused on the company’s earnings guidance, and the stock found itself under strong pressure.

What’s Next For General Motors Stock?

The company raised its guidance for the full-year 2021, but its new forecast is below analyst estimates. It looks that analysts were too optimistic while General Motors failed to live up to their high expectations. This is bad for the stock, and it is not surprising to see that shares of General Motors are dropping like a rock today.

I’d also note that worries about potential disruptions brought by the coronavirus pandemic may also have a negative impact on General Motors stock. While the company stated that is was confident about its performance in the second half of the year, the rapid spread of the Delta variant of coronavirus may ultimately put more pressure on chip manufacturers and hurt automakers.

Analyst estimates for General Motors’ earnings will be lowered which is often bearish for a stock despite the fact that investors have already seen the company’s own estimates. However, a strong correction may ultimately attract value-oriented investors who search for good deals in a very expensive market.

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

General Motors Sells Off Despite Strong Quarter

General Motors Co. (GM) is trading lower by more than 2% in Wednesday’s pre-market despite beating Q2 2021 top and bottom line estimates by healthy margins. The automaker earned $1.97 per-share during the quarter, $0.12 better than expectations, while revenue rose 103.8% year-over-year to $34.2 billion, more than $4 billion higher than consensus. The company raised full year 2021 earnings-per-share (EPS) guidance from the $4.50 – $5.25 range to the $5.40 – $6.40 range.

Production Hampered by Chip Shortages

Chip shortages continue to weigh on quarterly metrics and investor sentiment. The sell-the-news reaction comes just one day after General Motors announced the shutdown of three North American pickup truck plants due to shortages. These closures follow a hopeful June statement that outlined a series of steps to achieve higher production levels. Sadly, one of those initiatives focused on a Flint, Michigan pickup assembly that’s impacted by the latest shutdown.

Analyst Dan Niles at Wedbush Securities outlined the bull case on General Motors last month, posting an ‘Outperform’ rating while noting that “going forward GM continues to be a re-rating story as the Street treats the Detroit automaker no longer as a traditional auto company trading based on book value, but a broader disruptive technology play that can start to trade at multiples similar to the likes of Tesla and other pure-play electric vehicle companies.”

Wall Street and Technical Outlook

Wall Street consensus remains highly bullish, with a ‘Buy’ rating based upon 19 ‘Buy’, 1 ‘Overweight’, and 3 ‘Hold’ recommendations. Price targets currently range from a low of $64 to a Street-high $90 while the stock is set to open Wednesday’s session more than $7 below the low target. This dismal placement tells us that analysts have done a poor job estimating the impact of chronic chip shortages on 2021 share valuation.

General Motors broke out above the 2017 high in the 40s in January 2021, just ten months after posting an all-time low. The uptick carved a series of marginal new highs into June’s all-time high at 64.30, ahead of a pullback that reinforces resistance in the low 60s while generating more than seven weeks of testing at the 50-day moving average. Accumulation has now dropped to the lowest low since January but price action, so far at least, has held horizontal support at 54. That level marks a line-in-the-sand that bulls need to hold at all costs.

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

Disclosure: the author held no positions in aforementioned securities at the time of publication.

U.S. Automakers Reinstate Mask Mandates at All Plants Effective Wednesday

By David Shepardson

General Motors Co, Ford Motor Co and Stellantis NV said in a joint statement with the union the move is in response to the Center for Disease Control and Prevention’s (CDC) change in COVID-19 guidance for masks for fully vaccinated people related to the Delta variant.

The CDC said last week fully vaccinated people should wear masks indoors in public spaces in places with substantial or high COVID-19 community transmission rates. The CDC said on Monday that almost 80% of U.S. counties are now at those levels.

At least one major international automaker also plans to reinstate mask requirements for employees later this week, a person briefed on the matter told Reuters.

In June, the U.S. automakers and UAW announced that fully vaccinated workers at their U.S. factories would not have to wear masks on the job beginning on July 12. Numerous automakers operating in the United States had already begun lifting pandemic mask mandates as cases declined.

(Reporting by David Shepardson, Editing by Franklin Paul and Emelia Sithole-Matarise)

A Post-Covid Hangover – Should You Worry About Your Portfolio?

Amazon executives noted shifting consumer habits as the pandemic eases and people become more mobile. Amazon forecasted the next quarter’s sales at between $106 billion and $112 billion, compared to Wall Street expectations for right around $119 billion.

Amazon’s projections would still represent growth of +10% to +16%. Keep in mind, bears are also pointing to ongoing fears of supply chain hiccups, higher-trending inflation, and new coronavirus outbreaks. Earnings come at a busy pace again today with results from Caterpillar, Cerner, Chevron, CNH Industrial, Colgate Palmolive, Enbridge, Exxon Mobil, Johnson Control, and Procter & Gamble.

The worry on Wall Street is that this new normal rate of growth will be slower than many analysts and trading firms are forecasting coupled with higher inflation and or supply chain dislocations corporate profits could fall under some pressure or in this case be less than Wall Street is forecasting for the next few quarters. Bulls expect more consumer spending will shift from goods and pandemic-related services (delivery, video games, cloud/collaboration software) but are still betting on pent-up demand for things people missed out on during lockdowns, as well as goods and services that are currently in short supply.

Data to watch

Updated inflation data is also on tap with the ISM Manufacturing Index on Monday and the Services Index on Wednesday.

There will be plenty more earnings next week too, including Simon Properties and Zoom on Monday; Activision Blizzard, Alibaba, Amgen, Clorox, ConocoPhillips, Eli Lilly, Fidelity, Match Group, Monster Beverage, Occidental Petroleum, and Phillips 66 on Tuesday; Allstate, CVS, Etsy, General Motors, Kraft Heinz, Marathon Petroleum, MetLife, MGM Resorts, Rocket Companies, Roku, Trane, and Uber on Wednesday; Adidas, AMC, Carvana, Cigna, Cloudflare, Corteva, Duke Energy, Kellogg, Moderna, Nintendo, Novo Nordisk, Siemens, Square, Wayfair, Zillow, and Zoetis on Thursday; and Dish Network, Dominion Energy, and DraftKings on Friday.

Insider Accumulation

ES ##-## (Daily) 2021_08_01 (19_25_02)

I have mixed feelings about SP500. There are a few signs of weakness. However, it might be the result of low summer activity. Advance-Decline Line is clearly bearish. Insider Accumulation is also not that strong. Moreover, the Volatility Index is very low and potentially it could bring a pullback. In any case, SP500 futures failed to close the week above Gann resistance. And that is also a negative sign.

The Federal Reserve policy is still supportive. But keep in mind, that SP500 has rallied around 100% since the pandemic bottom without any pullback. And the retest of key support zones near 4200 and 4000 is realistic.

On the other hand, the continuation of the rally is also possible but only if price sustains above 4400. If that happens, bulls will target 4500 and 4600 in extension.