Why General Motors Stock Sank Today

What transpired

All week prolonged, the stock sector has been in a funk — and Thursday does not look to be distinct.

Lousy financial information is the key perpetrator nowadays, with the U.S. Bureau of Financial Examination acquiring just downgraded its assessment of the economy’s performance in Q1 to a contraction of 1.6%, and the Commerce Division reporting that “core” U.S. inflation remains higher at 4.7% (and that doesn’t even depend inflation from increased food stuff and vitality charges) — at the same time as customer disposable income is slipping.    

As you might expect, none of this is wonderful news for Common Motors (GM 1.35%), which needs customers to stay monetarily balanced so that they can manage to invest in its cars. Appropriately, GM stock is sinking 3.3% via 11:40 a.m. ET right now.

So what

And which is not the only disconcerting information for shareholders of the automotive giant right now. As the Detroit Totally free Push documented past night time, employees at four vegetation in Michigan that construct subsystems for GM were being organized to go on strike this morning unless the employees’ union — the United Vehicle Workers — reached an settlement with the corporation.  

Now, the good information is that, 15 minutes just before the strike was established to begin, GM and the UAW attained a “tentative” arrangement on a new agreement. The negative information is that we you should not but know the information of this arrangement (for illustration, does it incorporate wage hikes that will consume into profits?). And also, the settlement is only tentative, and has not however been ratified by the workers — so the potential for a production-halting strike continues to be.  

Now what

What would that mean for GM, if talks break down yet again, or employees are unsuccessful to ratify the tentative settlement? Most likely, it could hold off generation of such new electrical vehicles as the Hummer SUV, 2024 Chevrolet Silverado EV, and Cruise Origin self-driving EV — three products on which GM is pinning its long run as an electric vehicle maker.  

As the race heats up to see who can exchange Tesla as the chief in the EV industry, now would be a awful time for GM to hit a hiccup in its creation designs. For the time becoming, it appears GM has recognized this simple fact and found a compromise to retain its production buzzing — but this situation bears watching.