Premarket Power
As American General Motors workers ratify a new four-year labour contract, the company’s shares have reacted accordingly.
As of Monday morning, GM shares were trading at $36.96, up 0.64 percent from Friday’s close. The automaker saw premarket movement on Monday morning after reaching a new labour contract for its employees and UAW members. The agreements put an end to a 40-day strike that had affected GM plants across the United States and Canada.
During the third quarter, GM stock fell about 2.7 percent. The strike is predicted to significantly impact the automaker’s third-quarter earnings. Wall Street predicts GM will earn $1.38 a share in this year’s third quarter, down from $1.87 in 2018. Analysts estimate that the strike cost GM about $50 million a day, working out to about $2 billion in total for the 40-day labour action.
The strike, however, is less important to GM’s stocks than the state of the global automotive market. With global automotive production falling about three percent during the third quarter, GM could be facing more pressing issues in global auto sales.
Ford’s Fall
Ford Motor Co. reported its third-quarter results for 2019 last Wednesday, and the automaker’s net income in the third quarter has dropped nearly 60 percent.
Ford has reported a net income of $425 million for 2019’s third quarter, down 57 percent from Q3 in 2018, which reported $991 million in sales. Market analysts are blaming a $1.5 billion investment in special charges, including $1 billion for global restructuring, for the net income drop. Slow sales in China and the United States are also being blamed.
The automaker’s revenues also saw a 1.8 percent drop. For 2018’s third quarter the automaker reported earnings per share of 29 cents and revenues of $37.69 billion. 2019’s Q3 revenue was reported at $37 billion. Analysts have adjusted earnings per share for the fourth quarter at 27 cents and revenue of $37.3 billion. For the full year, estimates call for earnings per share of $1.26 on revenue of $144.65 billion.
The report did have some optimistic highlights, however. Wall Street estimates had predicted earnings per share of 26 cents, but, excluding the brand’s restructuring charges, Ford made 34 cents per share, beating out estimates by eight cents.
Despite the 60 percent drop in the automaker’s net income, the brand remains optimistic. Chief financial officer Tim Stone has said Ford is making significant progress, rolling out the right portfolio of new products, restructuring to improve productivity and developing smart autonomous vehicles.
“We think Q3 was a good quarter,” said Stone in a media briefing. “It also indicates we have more work to do.”
Tip Top Tesla
After Tesla shares jumped as much as 19.7 percent last Thursday and another 9.5 percent on Friday, the electric car company’s shares are up nearly 29 percent over two days.
Tesla’s third-quarter revenue remained in-line with analyst estimates, but market analysts were blown away by the automaker’s adjusted earnings per share, which came in at $1.86. Analysts had forecast earnings per share of just $0.42.
Free cash flow also obliterated analyst estimates, coming in at $371 million when analysts had expected free cash flow of $32 million.
As a result, Tesla’s stocks jumped from $254.68 on Wednesday to $298.82 on Thursday morning. On Friday, stocks closed at $297.85 and, as of 11 a.m. EST on Monday, Tesla shares stood at $332.75.
If Tesla wants to hold onto its stock success it will need to execute well during its important holiday quarter. In order for the company to achieve its guidance to deliver 360,000 or more deliveries during 2019, the automaker will need to deliver about 105,000 vehicles during the period, which would be a quarterly record for the company.
