GM Stock (GM)
You can’t talk about GM without leading with its seemingly never-ending recall debacle. GM has recalled nearly 30 million vehicles, and the related costs absolutely clobbered the bottom line. For the most recent quarter, GM said net income fell 80% after taking a hit of $1.2 billion in recall charges.
In other bad news, on an adjusted basis, GM earned 58 cents per share, or a penny short of Wall Street estimates, according to a survey by Thomson Reuters. As if that weren’t enough, uncertainty about victim compensation and some regional weakness also weighed on GM stock in early trading.
GM said it set aside $400 million to compensate victims, but that figure could increase by another $200 million. Since the final tally will be decided by an outside compensation expert, those are GM’s best estimates. The actual damage could be worse, and that’s going to continue to tug on GM stock.
In another knock against GM stock, the auto maker isn’t faring as well in regional operating profitability as Ford. North America and China showed ongoing strength, but Europe and South America logged losses.
However, GM’s revenue actually rose slightly, up to $39.6 billion from $39.1 billion a year ago. That’s a big point in GM’s favor, as is the case that monthly sales figures continue to be robust regardless of the recalls.