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Auto Stocks Under the Hood: What Happened Last Week?

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Auto Stocks Under the Hood: What Happened Last Week? PART 1 OF 5

Why Auto Stocks Kept Slipping Last Week

Auto stocks’ 1Q17 review

In 1Q17, the broader market was trading on a positive note and ended the quarter with ~5.5% in gains. Meanwhile, the stocks of two largest US automakers underperformed the broader market during the first quarter, with General Motors (GM) inching up by only 1.5% and Ford Motor (F) falling 4.0%.

By contrast, Fiat Chrysler Automobiles (FCAU) and Tesla (TSLA) both delivered impressive returns of about 19.8% and 30.2%, respectively, in 1Q17. Let’s take a look at how auto stocks performed in the second week of April, specifically.

Why Auto Stocks Kept Slipping Last Week

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Weakness continues in auto stocks

Last week (ended April 15), the stocks of mainstream automakers continued to slip amid broader market weakness, as the S&P 500 Index (SPY) fell 1.1%. During the same week, GM, Ford, and Fiat Chrysler dropped by 0.9%, 1.1%, and 4.2%, respectively.

Tesla managed to hold onto its gains, however, ending the week in the green with a 0.5% rise. Notably, Tesla’s stock has risen 9.2% on MTD (month-to-date) basis, unlike other auto stocks. The company’s solid 1Q17 vehicle deliveries and production figures could be the primary reason for the recent optimism in its stock.

US auto sales

According to Autodata Corporation, US auto sales fell ~1.5% on YoY (year-over-year) basis to 4.03 million vehicle units in the first quarter of 2017. Mainstream automakers Fiat Chrysler and Ford reported declines in their first quarter US sales last week. Investors’ concerns about softening US auto sales—with mixed broader market sentiments—could be driving automakers’ continued underperformance on Wall Street.

Notably, Harley-Davidson (HOG), the US heavyweight motorcycle pioneer, is set to release its 1Q17 results on April 18. (Read Harley-Davidson: What to Watch in Its 1Q17 Earnings to learn what Wall Street analysts are estimating for its upcoming earnings.)

Series overview

In this series, we’ll review these major auto stocks’ Wall Street performances in the second week of April. We’ll explore what developments took place and examine key technical support and resistance levels for these companies for the week ahead.

Continue to the next part for a closer look at General Motors.

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