What Happened?
Shares of automotive manufacturer General Motors (NYSE:GM) jumped 8.2% in the mid-day session after the Trump administration announced a one-month delay for tariffs on automakers whose cars comply with the United States-Mexico-Canada Agreement. This is good news, particularly for affected automakers entangled in the trade war. Markets had projected potential disruptions to the supply networks of auto manufacturers as the tariffs meant an increase in the cost of raw materials, parts, and finished goods. This delay doesn't solve the problem, but it does buy a little extra time to adjust and prepare for what comes next.
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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 dropped 11.1% on the news that the company reported fourth-quarter earnings and provided guidance that assumed a stable policy environment in the US, thus failing to help investors shrug off concerns relating to the impact of regulatory measures.
A key concern was the Trump administration's potential plans to reduce incentives like tax credits, which helped accelerate the demand for EVs. If these plans are implemented, both GM and other EV players may need to rethink their growth forecasts.
A Bernstein analyst added following the earnings release "In our view, the guidance for 2025 leaves no room for errors, and also does not include impact from regulatory changes in the U.S., especially on tariffs and BEV support."
On a more positive note, General Motors beat analysts' revenue expectations, and its full-year EPS guidance came in higher than Wall Street's estimates. Overall, this was a mixed quarter, which failed to clear up uncertainties.
General Motors is down 5.5% since the beginning of the year, and at $48.45 per share, it is trading 19.5% below 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 $1,613.
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