Why General Motors Stock Is Down By 8% Today

General Motors’ Stock Declines As Earnings Guidance Misses Analyst Estimates

Shares of General Motors gained strong downside momentum after the company released its second-quarter results. General Motors reported revenue of $34.2 billion and GAAP earnings of $1.90 per share, easily beating analyst estimates on both earnings and revenue.

For the full-year 2021, the company expects to report earnings GAAP earnings of $5.12 – $6.12 per share. On an adjusted basis, General Motors projects to report a profit of $5.40 – $6.40 per share, and the company’s expectations are lower than analyst estimates.

General Motors stated that it should have a strong second half of the year despite risks posed by the coronavirus pandemic and global chip shortage. However, the market focused on the company’s earnings guidance, and the stock found itself under strong pressure.

What’s Next For General Motors Stock?

The company raised its guidance for the full-year 2021, but its new forecast is below analyst estimates. It looks that analysts were too optimistic while General Motors failed to live up to their high expectations. This is bad for the stock, and it is not surprising to see that shares of General Motors are dropping like a rock today.

I’d also note that worries about potential disruptions brought by the coronavirus pandemic may also have a negative impact on General Motors stock. While the company stated that is was confident about its performance in the second half of the year, the rapid spread of the Delta variant of coronavirus may ultimately put more pressure on chip manufacturers and hurt automakers.

Analyst estimates for General Motors’ earnings will be lowered which is often bearish for a stock despite the fact that investors have already seen the company’s own estimates. However, a strong correction may ultimately attract value-oriented investors who search for good deals in a very expensive market.

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