General Motors Co. (GM) and Ford Motor Co. (F) fell to new 52-week lows in two consecutive trading sessions due to weak market conditions and the target price cuts by Morgan Stanley (MS). Additionally, continued recalls and increased death claims due to the ignition switch issue compounded problems for General Motors, while the continued impact of a weak 2014 outlook, revealed on Sep 29, dragged Ford.
Meanwhile, Tesla Motors, Inc. (TSLA) gained significantly over the last five trading sessions on speculation of announcements related to a new vehicle and additional features for current vehicles.
Recap of the Week’s Most Important Stories
- Stock price of Tesla increased for three consecutive trading sessions till Oct 6 as analysts and investors speculated on CEO Elon Musk’s tweet that promised to “unveil the D and something else” on Oct 9. The company had also circulated a picture of a half-opened garage door marked with the letter D that had a dimly lit vehicle inside. This led to speculation that Tesla will announce a new car as well as additional driving-assist features for its existing cars. (Read more: Will Tesla Unveil Automated Driving Features, New Car?)
- On Oct 7, 2014, shares of General Motors tanked to a 52-week low of $31.65. The shares eventually closed at $31.77, with a negative year-to-date return of 20.4%. The 52-week low came on the heels of Morgan Stanley’s lowering of price target range to $27–$29 for the automaker with the reiteration of an underweight rating. Moreover, the number of deaths associated with the faulty ignition switch has been increasing, while the automaker continues to announce more recalls. The stock fell further on Oct 8, reaching another 52-week low of $30.79 before rising to close at $32.18. (Read more: General Motors at 52-Week Low on Target Price Cut, Recalls.)
- Shares of Ford also touched a new 52-week low of $14.08 on Oct 7, given the weakness in the overall market and weak investor sentiment for the automaker that has been prevailing since the Investor Day conference on Sep 29, when Ford revealed weak outlook for 2014. As with General Motors, shares of Ford also plunged further on Oct 8 to reach another 52-week low of $13.62 before rising to close at $14.21. The decline on Oct 8 was partly contributed by the downward revision of Ford’s target price to $14 from $16 by Morgan Stanley.
- Thor Industries Inc.’s (THO) stock gained 1.6% on Oct 6, as the market factored in the impact of the 17% increase in the regular quarterly dividend announced by the company on Friday. The board of directors of Thor approved the increase in dividend to 27 cents from 23 cents in a meeting on Oct 3. Thor will pay the increased dividend on Oct 31 to shareholders of record as of Oct 17. (Read more: Thor Shares Rise on 17% Hike in Quarterly Dividend.)
- Honda Motor Co., Ltd. (HMC) started selling the 2015 CR-Z sport hybrid coupe on Oct 8. The vehicle is available in six different models, with a manufacturer's suggested retail price of $20,145 for the most economic one. Standard featured in the vehicle include Bluetooth HandsFreeLink, Bluetooth Audio, rearview camera, an expanded view driver's mirror, AM/FM/CD/USB audio system with six speakers, automatic climate control, power windows and door locks, remote entry and cruise control.
Performance
The performance of auto stocks remained mixed in the last five trading sessions as well as the past six months. Tesla led in both time periods, with impressive 7.93% and 19.52% gains in the last five trading sessions and past six months, respectively. Honda lost the most in the last one-week period, while Harley-Davidson, Inc. (HOG) lost the maximum in the six-month period.
|
Company |
Last 1-Week Period |
Last 6 Months |
|
GM |
-0.95% |
-4.28% |
|
F |
-2.60% |
-10.29% |
|
TSLA |
+7.93% |
+19.52% |
|
TM |
-0.33% |
+7.92% |
|
HMC |
-2.75% |
-3.89% |
|
HOG |
+2.31% |
-13.13% |
|
AAP |
+4.84% |
+12.55% |
|
AZO |
+1.93% |
-1.83% |
What’s Next in the Auto World?
Tesla is scheduled to make an announcement later today where it will “unveil the D and something else”. With Musk hinting that the announcement is bigger than the ongoing market speculations, we expect the stock to continue climbing.
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