Why General Motors Stock Sank Today

What occurred

All 7 days long, the stock marketplace has been in a funk — and Thursday would not look to be different.

Lousy economic information is the key offender these days, with the U.S. Bureau of Financial Examination having just downgraded its assessment of the economy’s performance in Q1 to a contraction of 1.6%, and the Commerce Section reporting that “core” U.S. inflation stays large at 4.7% (and that won’t even depend inflation from greater food and electrical power costs) — at the same time as buyer disposable cash flow is falling.    

As you may expect, none of this is great news for Basic Motors (GM 1.35%), which demands customers to keep on being monetarily wholesome so that they can afford to acquire its cars and trucks. Appropriately, GM inventory is sinking 3.3% by way of 11:40 a.m. ET today.

So what

And that’s not the only disconcerting information for shareholders of the automotive big right now. As the Detroit Free of charge Push noted very last night, workforce at 4 vegetation in Michigan that establish subsystems for GM were organized to go on strike this morning until the employees’ union — the United Automobile Employees — arrived at an arrangement with the corporation.  

Now, the good information is that, 15 minutes right before the strike was established to commence, GM and the UAW reached a “tentative” settlement on a new deal. The terrible information is that we don’t yet know the information of this agreement (for case in point, does it comprise wage hikes that will take in into revenue?). And also, the arrangement is only tentative, and has not however been ratified by the employees — so the possible for a manufacturing-halting strike remains.  

Now what

What would that suggest for GM, if talks split down once again, or workers are unsuccessful to ratify the tentative settlement? Possibly, it could delay production of this kind of new electric autos as the Hummer SUV, 2024 Chevrolet Silverado EV, and Cruise Origin self-driving EV — 3 designs on which GM is pinning its long run as an electrical car maker.  

As the race heats up to see who can change Tesla as the leader in the EV marketplace, now would be a awful time for GM to hit a hiccup in its production ideas. For the time remaining, it appears GM has identified this reality and found a compromise to maintain its output humming — but this situation bears looking at.