Double Click 728 x 90
Double Click 900 x 250

GM, Ford continues struggle after Tesla’s skyrocketing valuation


Arhama AltafWeb Editor

06th Feb, 2020. 11:33 am
Double Click 160 x 600
GM Ford

While Wall Street continued to ogle Tesla´s skyrocketing valuation Wednesday, shares of Ford and General Motors (GM) were under pressure after reporting fourth-quarter losses.

Ford also closed plants in Europe and South America and GM has struggled to completely shake the effects of a 40-day strike last year that effectively shut down its US operation.

The year´s dreary finale for two of Detroit´s “Big Three” underscored anew the vast existential gulf between 21st century Tesla and two industrial-age giants that are rebooting themselves for a future that emphasizes electric cars and autonomous driving.

As Tesla launches production in China and lays the foundation to build cars in Germany.

Shares of Ford plunged 9.4 percent in early-afternoon trading to $8.31, while GM was up 0.2 percent at $34.45.

But after its dizzying rise, Tesla shares slumped 18.6 percent to $722.58 on Wednesday as investors took profits following a stunning surge the last two sessions that lifted shares by more than 36 percent.

Tesla has shown “incredible volatility,” said J.J. Kinahan, chief market strategist at TD Ameritrade.

“When I first started trading futures, an old guy said to me, ´Be careful of chocolate covered hand-grenades,” Kinahan said.

“That´s a little bit how I feel about Tesla at the moment.”

Investors especially punished Ford, which suffered a $1.7 billion fourth-quarter loss.

It released a disappointing outlook for 2020 earnings, the latest in a run of lackluster results.

The loss — bigger than its $100 million shortfall in the fourth quarter of 2018 — included a charge of $2.2 billion for increased costs of retirement packages, as well as a hit from lower car sales and elevated spending tied to new vehicle unveiling.

Revenues dipped 5.0 percent to $39.7 billion.

Results were marred by a botched launch of the Ford Explorer, a leading SUV model that resulted in lower sales.

GM said a 40-day strike that shuttered US factories dented fourth-quarter profits by $2.6 billion, bringing the total negative impact for 2019 to $3.6 billion.

The US auto giant suffered a fourth-quarter loss of $194 million, compared with $2 billion in profits in the same period a year earlier.

While, revenues fell 19.7 percent to $30.8 billion.

GM has said previously that it had sufficient inventory prior to the strike to keep dealerships adequately supplied but the walkout derailed production of its top-selling trucks.

Double Click 300 x 250

Download BOL News App for latest news