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Why GM Stock Fell in the First Half of December 2017

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GM stock

During the week ended December 15, General Motors (GM) stock settled at $40.95 with an ~2.5% drop from the previous week’s closing price. This was the third consecutive week in which the company witnessed value erosion on Wall Street. In the previous week, the stock fell 1.8%.

In November 2017, GM traded on a mixed note and ended the month with a minor gain of ~0.3%. In comparison, the S&P 500 Index (SPY) (SPX-INDEX) rose 2.8% during the same period.

In 2016, GM was the largest auto company (IYK) in the US. Last year, Ford (F), Toyota (TM), and Fiat Chrysler (FCAU) ranked second, third, and fourth, respectively, by US sales volumes.

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Negative factors

In November 2017, General Motors’ home market sales fell 2.9% YoY (year-over-year) to 245,387 units. The company cut its vehicle deliveries to daily rental car companies, which drove its fleet sales down 13.0% during the month.

GM’s retail sales in the US didn’t show any improvement and were nearly flat at 197,340 vehicle units. This flat report could have driven negative sentiment on Wall Street in the first half of December 2017.

GM has reported improvement its profit margins despite a slowdown in US auto sales in the last two years. GM’s primary focus on profitable retail sales has steered it to higher profitability.

The company has also accelerated the development of its autonomous and electric vehicles in 2017. It plans to launch 20 new electric vehicles by 2023 to take on peers such as electric carmaker Tesla (TSLA).

Technical outlook

On December 18, GM stock witnessed a sharp recovery of 2.9% to settle at $42.15. The stock tested a support level near $40.60 last week, which should act as an important support level this week. On the upside, immediate resistance lies near the $43.40 price level.

However, GM’s stock price is still hovering significantly below its 50-day SMA (simple moving average) of $43.60, suggesting weakness in its short-term trend.

In the next part, we’ll see how Ford stock traded last week.

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