Last week, General Motors (GM) stock traded on a negative note and fell about 0.90% from the previous week’s closing price. As of February 24, 2017, GM has risen about 5.9% on a YTD (year-to-date) basis.
Now let’s take a look at some recent developments related to GM’s European business and how it could have an impact on GM stock.
On February 14, 2017, GM confirmed the possibility of a potential acquisition of its European business by PSA Group. GM is talking about the possibility of moving in this direction, but currently, there has been no agreement. The deal would result in PSA Group, a French auto giant, acquiring GM’s European brands—Vauxhall and Opel.
Possible impact on GM stock
Europe is the second-largest geographical segment for General Motors after North America. In 4Q16, it accounted for 10.0% of the company’s total revenues, lower than 11.9% in the corresponding quarter of the previous year.
For the last several quarters, GM has been struggling to protect its profitability in the European market. After the Brexit vote in June 2016, the situation got worse for GM. Currency headwinds from European markets as a result of the Brexit have taken a toll on GM’s profitability in Europe. So exiting the European market could help the company focus on other profitable markets, which could boost investor confidence.
In the next part of this series, let’s look at Ford’s technical price level for this week.