What Happened?
Shares of automotive manufacturer General Motors (NYSE:GM)
fell 8.5% in the afternoon session after President-elect Donald Trump announced his tariff plans, which some analysts believe "places a bulls-eye on the auto industry."
In a social media post, Trump stated that upon resuming office, his first set of executive orders would include "charging Mexico and Canada a 25% tariff on ALL products entering the U.S. and addressing its ridiculous open borders." He added, "This tariff will remain in effect until drugs, particularly fentanyl, and all illegal aliens stop this invasion of our country."
The anticipated elimination of electric vehicle (EV) tax credits is already projected to slow the sales volume of electric vehicle manufacturers. Additionally, imposing tariffs on goods from some of the U.S.'s largest trading partners will put further pressure on the profit margins of automobile manufacturers.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy General Motors? Access our full analysis report here, it’s free.
What The Market Is Telling Us
General Motors’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about a month ago when the stock gained 9.2% on the news that the company reported strong third-quarter earnings results that blew past analysts' revenue and EPS expectations. Guidance was solid as its full-year EPS guidance exceeded Wall Street's estimates. Notably, the company raised the lower end of guidance for key operating metrics, including net income, adjusted operating income, free cash flow, and EPS. Overall, we think this was a solid quarter with some key areas of upside.
General Motors is up 53% since the beginning of the year, and at $55.15 per share, it is trading close to its 52-week high of $60.20 from November 2024. Investors who bought $1,000 worth of General Motors’s shares 5 years ago would now be looking at an investment worth $1,536.
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