GM shares hit a new low of 52 weeks after the Wells Fargo downgrade

Mary Barra, president and CEO of General Motors Company (GM), speaks during the Milken Institute Global Conference in Beverly Hills, California on May 2, 2022.

Patrick T Fallon | AFP | Getty Images

DETROIT – Shares of General Motors It hit a new 52-week low on Thursday and opened at its lowest price since November 2020, after Wells Fargo downgraded the stock and significantly lowered the company’s target price.

Wells Fargo analyst Colin Langan downgraded GM’s rating after the market closes on Wednesday to “underweight” from “overweight” and cut the company’s price target from $ 74 per share to $ 33 per share.

This year could represent a profit spike for legacy automakers, with the shift to electric vehicles eroding profits for years to come, he said in a note to investors.

“We see headwinds from price normalization, inflationary costs and UAW contract negotiations of 2023. Therefore, we are concerned that 2022 may be the peak of profits as GM will increasingly be forced to absorb BEV losses to meet the high. US regulatory hurdles of 2026, “he said.

For the same reasoning, Langan also downgraded on Wednesday Ford engine to “underweight” and halve its price target from $ 24 per share to $ 12 per share.

GM stock was down about 6% to $ 35 on Thursday morning after opening at its lowest point since November 2020. The company’s market capitalization is around $ 51 billion.

Shares of Ford fell more than 4% to $ 12.27. The stock’s 52-week low is $ 11.28 per share from May 2021. Ford’s market capitalization is approximately $ 49 billion.

Ford chairman Bill Ford said during the company’s annual meeting on Thursday that he remained bullish on the automaker’s long-term business plans, despite the stock’s performance this year.

“2021, our stock was on fire. This year it’s back to Earth a little bit. The whole market is coming back to Earth, but I’ve never been so sure of our future,” he said. Later adding: “You can’t run the business for the share price, run the business to build a big and lasting company.”

Shares of Detroit automakers were already under pressure before Wells Fargo’s double downgrade. Both stocks are down nearly 40% this year.