Mary Barra, Chair and CEO of the Basic Motors Firm (GM), speaks in the course of the Milken Institute World Convention in Beverly Hills, California, on Might 2, 2022.
Patrick T. Fallon | AFP | Getty Photographs
DETROIT — Shares of General Motors on Thursday hit a brand new 52-week low and opened at their lowest worth since November 2020, after Wells Fargo downgraded the inventory and considerably slashed its goal worth for the corporate.
Wells Fargo analyst Colin Langan lowered GM’s ranking after market close Wednesday to “underweight” from “chubby” and minimize the corporate’s worth goal from $74 a share to $33 a share.
This 12 months might characterize a revenue peak for legacy automakers, with the shift towards electrical automobiles eroding earnings within the years forward, he mentioned in a be aware to traders.
“We see headwinds from worth normalization, inflationary prices, and the 2023 UAW contract negotiations. Due to this fact, we’re involved that 2022 could possibly be the height earnings as GM might be more and more pressured to soak up BEV losses to satisfy excessive 2026 US regulatory hurdles,” he mentioned.
For a similar reasoning, Langan on Wednesday additionally downgraded Ford Motor to “underweight” and minimize its worth 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 corporate’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 Might 2021. Ford’s market cap is about $49 billion.
Ford Chair Invoice 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 inventory was on hearth. This 12 months it is come again to Earth a bit. The entire market is coming again to Earth, however I’ve by no means been extra assured of our future,” he mentioned. Later he added, “you may’t handle the enterprise for inventory worth, you handle the enterprise to construct a fantastic and enduring firm.”
Shares for the Detroit automakers have been already beneath strain earlier than the double downgrade from Wells Fargo. Each shares have declined practically 40% this 12 months.