There have been few car companies that have sought to expand their strategy as much as General Motors have in the past year. While major American car brands such as Ford have stagnated, GM has gained steadily through the year, but this all came to a halt yesterday.
Bloomberg reports that:
The automaker fell 2.8 percent to $43.37 at the close in New York, after earlier declining the most since February as at least two analysts began questioning whether its core auto business can sustain profits.
The questions about GM’s profits come down to whether or not the company will be able to recover to a point where it will become more profitable than last year. There are also some major production issues to address. So far signs of that kind of recovery are few and far between. Yahoo Finance writes:
Last quarter, General Motors had to cut output 26% year over year in its core North American market. This cut included planned downtime related to future product launches, lower production of slow-selling passenger cars to facilitate an inventory correction, and (to some extent) the impact of a strike at the Canadian plant that builds the popular Chevy Equinox crossover.
These sorts of problems could hamper GM’s performance in the long run. If the company cannot resolve these production issues, it could affect sales down the line.
Bloomberg writes that one bearish analyst from Goldman Sachs, David Tamberrino, has “set a price target of $32,” which is well short of its price today. If his predictions are correct, then investors should be prepared to adapt their investments accordingly.
To read Bloomberg’s article about GM’s recent troubles, click here.
To read Yahoo Finance’s analysis of GM stock, click here.
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