Why GM Stock Tanked Nearly 6% Last Week



GM stock

Last week, General Motors (GM) stock fell 5.9% after registering a minor rise of 0.3% in the previous week. While GM stock rose 16.2% in May, it turned negative in June and fell ~7.7%, 3.8%, and 4.9% in June, July, and August, respectively.

This negative trend is continuing in the final month of the third quarter. The stock has fallen 13.9% quarter-to-date as of September 7. Let’s take a look at its key support and resistance levels before we explore its fundamental updates.

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Technical outlook

On September 10, GM stock settled at $33.87. The stock violated an important support level near $34.80 on September 6 and has been trading on a strong bearish note. The next key support level for GM stock lies near $32.30. The possibility of price testing this support level in the coming few sessions can’t be ruled out.

On the upside, prior support of $34.80 should now act as an immediate resistance level. The stock’s 14-day RSI (relative strength index) indicator is at 29.4, indicating that it’s entered oversold territory and reflecting severe weakness in its momentum.

In 2017, GM continued to be the top auto company (FXD) based on US auto sales volumes. Ford Motor Company (F), Toyota Motor (TM), and Fiat Chrysler Automobiles (FCAU) followed as the second-, third-, and fourth-largest automakers by sales volumes in the United States, respectively.

Recent updates

GM stopped reporting its US sales data on a monthly basis in April. The company’s US sales in the second quarter remained strong. It registered a 4.6% YoY (year-over-year) rise in its home market sales.

During the quarter, GM reported a ~4% YoY fall in its adjusted EPS to $1.81. The company’s operating profit margin contracted to 8.7% in the second quarter compared to 10.0% in the second quarter of 2017. This is why General Motors’ second-quarter results failed to impress investors. Like its home market peer Ford, GM also revised its 2018 guidance downward during its recent earnings event.

In the next article, we’ll take a look at Fiat Chrysler’s key technical levels for the week ahead.


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