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Why GM Stock Underperformed Peers Last Week

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GM stock

Last week, General Motors (GM) stock settled at $35.17, falling ~7.3% from the previous week, when the stock rose 0.3%. As of March 23, General Motors stock had fallen 10.6% in March. In February, the stock fell 7.2%, erasing its January gains of 3.5%. In 2017, GM ended the year positively, gaining 17.7%. The S&P 500 rose 19.4%. 

According to 2017 US auto sales data, GM continued to be the largest auto company (VCR) in the country, ahead of Toyota (TM), Fiat Chrysler (FCAU), and Ford (F).

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Key technical levels

Last week, GM stock violated the previously important horizontal support level of $36.80, attracting renewed selling pressure. This support level is followed by a key resistance level of $40.80.

The stock price was already well below its 50-day simple moving average of $40.55. Its 14-day RSI (relative strength index) score was below the line of equilibrium of 26.3, suggesting weakness in its underlying momentum. Immediate horizontal support lies at $34.50.

Recent developments

In the last few years, General Motors has increased its focus on China. In 2017, the company’s Chinese sales rose 4.4% YoY (year-over-year) to 4.0 million vehicles. A potential trade war with China could hurt GM’s business in the country, which could be one reason why its stock underperformed peers last week after Donald Trump’s decision to impose tariffs on China imports.

On March 16, the NHTSA (National Highway Traffic Safety Administration) revealed its plans to investigate the failure of Kia Motors America’s and Hyundai Motor America’s airbag control units. The authority may also seek to determine if other US automakers used similar units.

In February 2018, General Motors’ home market sales fell sharply, by 6.9% YoY to 220,905 units. In contrast, the company’s fleet sales rose 7% YoY last month due to a 15% jump in its commercial deliveries. GM’s US market retail sales remained weak at 168,971 vehicle units in February, down 10.5% YoY. Continue to the next part, where we’ll see how Ford stock has traded in the last few weeks.

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