Mary Barra, Chair and CEO of the General Motors Company (GM), speaks in the course of the Milken Institute Global Conference in Beverly Hills, California, on May 2, 2022.
Patrick T. Fallon | AFP | Getty Images
DETROIT — Shares of General Motors on Thursday hit a brand new 52-week low and opened at their lowest value since November 2020, after Wells Fargo downgraded the inventory and considerably slashed its goal value for the corporate.
Wells Fargo analyst Colin Langan lowered GM’s ranking after market shut Wednesday to “underweight” from “overweight” and minimize the corporate’s value goal from $74 a share to $33 a share.
This 12 months may signify a revenue peak for legacy automakers, with the shift towards electrical autos eroding income within the years forward, he mentioned in a word to traders.
“We see headwinds from price normalization, inflationary costs, and the 2023 UAW contract negotiations. Therefore, we are concerned that 2022 could be the peak profits as GM will be increasingly forced to absorb BEV losses to meet high 2026 US regulatory hurdles,” he mentioned.
For the identical reasoning, Langan on Wednesday additionally downgraded Ford Motor to “underweight” and minimize its value goal in half from $24 a share to $12 a share.
GM shares fell about 6% to $35 on Thursday morning after opening at their lowest level since November 2020. The firm’s market cap is about $51 billion.
Shares of Ford declined greater than 4% to $12.27. The inventory’s 52-week low is $11.28 a share from May 2021. Ford’s market cap is about $49 billion.
Ford Chair Bill Ford in the course of the firm’s annual shareholder assembly Thursday mentioned he stays bullish on the automaker’s long-term enterprise plans, regardless of the inventory’s efficiency this 12 months.
“2021, our stock was on fire. This year it’s come back to Earth a bit. The whole market is coming back to Earth, but I’ve never been more confident of our future,” he mentioned. Later he added, “you can’t manage the business for stock price, you manage the business to build a great and enduring company.”
Shares for the Detroit automakers have been already beneath stress earlier than the double downgrade from Wells Fargo. Both shares have declined practically 40% this 12 months.