General Motors (GM) is preparing to report its first quarter Wednesday after a global chip shortage forced GM to extend plant downtime as it prepares to roll out a flood of electric vehicles. What will GM’s earnings look like?
Along with GM’s revenues, Wall Street will keep an eye on any impact of the chip shortage on the automaker’s production. In February, GM said it would be “premature” to discuss the impact of volume, but Ford Motor April 29 (F) warned that it plans to produce 1.1 million fewer cars this year due to a shortage of semiconductors.
Investors will also wait to see if the long-awaited GM Hummer EV, its first all-electric truck, remains this fall despite the chip crisis.
Evaluations: Early Wednesday, Wall Street expects GM’s earnings to rise 65% to $ 1.02 a share and revenues to grow nearly 2% to $ 33.26 billion, according to Zacks Investment Research. This will mark the strongest sales growth in at least eight quarters.
Last quarter, General Motors boosted car sales 4% year-on-year in the US on demand for SUVs and trucks, and 69% in China after the pandemic hit sales last quarter.
Results: Check back later.
Perspectives: In February, GM warned of a short-term production hit: EBIT is down $ 1.5 billion to $ 2 billion this year. On April 1, GM said it expects to recover lost vehicle production in the second half of the year.
Since then, the deepening drought has forced GM to extend plant downtime, including plants in Tennessee, Michigan, Kansas and Canada. Ford has taken similar steps.
Shares rose 0.3% to 57.42 in stock market trading on Monday.
According to MarketSmith chart analysis, GM stock offered an entry at 54.75 in March after pulling back to the 10-week line.
General Motors stock is now struggling to find support on its 50-day and 10-week lines again. Stocks are looking for another possible shallow consolidation in a few weeks, but there is no new buy point yet.
If GM rolls back confidently from its 10-week earnings forecast, investors could use this as an early entry.
Ford shares were up 0.65%. Volkswagen shares gained 0.6%. Tesla (TSLA) fell 3.7% amid reports that a key plant in Berlin will not start production until 2022. Stocks are testing the 50-day line again. Tesla stock bounced above this important level on Friday after an initial drop following last week’s earnings.
On Thursday, Volkswagen is likely to see profits rise 578% to 61 cents and sales rise nearly 10% to $ 66.64 billion.
On Monday, Volkswagen (VWAGY) warned that the chip shortage will limit production of cars in general, while keeping electric vehicles. The German auto giant is working with GM and Ford for an emission-free future.
Outdated carmakers keep catching up Tesla (TSLA). Meanwhile, hot electric vehicle startups love Nio (NIO) reported skyrocketing sales in April from a year earlier, but overall shipments were little changed from March.
Now GM CEO Mary Barra calls EVs “a supercycle opportunity” and plans to sell EVs only by 2035.
GM’s all-electric Hummer truck is expected to arrive at the end of 2021, amid $ 27 billion in electric vehicles and antivirus investments. The Cadillac luxury electric SUV will arrive by mid-2022 and the Hummer electric SUV by early 2023.
An all-new EV platform called Ultium supports these vehicles, and GM’s goal is to sell one million EVs annually by 2025.
On Monday, rival Ford also clarified its plans for the production of electric vehicles and batteries for electric vehicles. The automaker announced that it has spearheaded a $ 130 million funding round at Solid Power. The Colorado-based startup makes solid-state batteries, which it touts as being lighter and more efficient.
Ford said last week that it will invest $ 185 million in a new battery lab, a step towards building its own batteries for electric vehicles. Ford plans to invest $ 22 billion in electric vehicles by 2025, including past investments.
VW is a major investor in a solid-state startup QuantumScape (QS). Volkswagen is also ramping up its own battery production.
Find Aparna Narayanan on Twitter at @IBD_Aparna…
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