Yahoo Finanza General Motors Shares Dive As Company Warns About Chip Shortage
General Motors Video 10.02.21.
General Motors’ Operating Profit Will Be Cut By Up To $2 Billion Due To Global Chip Shortage
General Motors has recently provided its fourth-quarter earnings report. The company reported revenue of $37.52 billion and GAAP earnings of $1.93 per share, beating analyst estimates on both earnings and revenue.
The company enjoyed solid performance as the pickup truck market remained strong. Fourth-quarter unit sales increased by 5% in the U.S. and grew by as much as 14% in China which continued to enjoy strong economic rebound after the blow dealt by the coronavirus pandemic.
General Motors stated that it expected to report earnings of $4.50 – $5.25 per share in 2021 which was below analyst estimates. The global chip shortage is expected to cut operating profit by $1.5 billion – $2 billion, and the negative impact of the global chip shortage was not baked in analyst estimates.
The rapid growth of the electric vehicle market together with the increased digitalization of all cars increased demand for chips at a time when chip producers suffered shutdowns and delays due to the coronavirus pandemic. At this point, it looks like automakers will have to deal with chip shortages for the full 2021.
What’s Next For General Motors?
Shares of General Motors were trading near yearly highs before the release of the earnings report, and the news about the negative impact of the global chip shortage caused a sell-off.
It remains to be seen whether the current pullback will continue as the market has recently became more enthusiastic about the fate of established producers like General Motors or Ford. Tesla shares have become very expensive after the recent rally, and some traders look ready to try alternative bets on the future of the auto industry at a time when established producers are trying to catch up with the latest developments in the electric vehicle space.
In this light, shares of General Motors will likely need additional negative catalysts to move below current levels.
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This article was originally posted on FX Empire
