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General Motors is one stock that has been outperforming this year. From January to November, the stock has risen 75%. GM has established itself as a cornerstone of the automotive industry, showing remarkable resilience, innovation, and adaptation in the face of evolving market demands. Even though the company is leading among its competitors, incoming tariffs could be a major threat for the company’s outlook.
Trump’s Tariffs Threat
GM and other automaker stocks fell on Wednesday after President-elect Trump declared a 25% tariff on imports from partner nations Canada and Mexico. Trump also called for an additional 10% levy on Chinese goods.
For decades, free trade agreements among the U.S., Canada, and Mexico have fostered an interconnected North American auto industry, enabling cost-efficient supply chains. Proposed tariffs, including a 25% levy, now threaten to disrupt this system by significantly increasing production costs and driving up vehicle prices especially when the company imports from their plants in Canada and Mexico
The tariffs would not only impact GM’s imported vehicles but also parts sourced from Mexico, raising costs for its U.S.-based plants. Compounding these challenges, the potential removal of the $7,500 EV subsidy could further increase prices for GM’s electric SUVs. Higher prices for key models, such as pickups and SUVs, risk dampening consumer demand, putting additional pressure on GM’s profitability.
Q3 Earnings
Despite the tariffs threat, GM reported a very strong set of quarterly results back in October. A Q3 EPS of $2.96 topped the Wall Street estimates target of $2.40. Meanwhile, revenue of $48.8 billion, up more than 10% from the same period a year earlier, was a material $4.4 billion beat.
The elimination of EV tax credits might also work to the company’s advantage. During the previous quarter, GM improved overall profitability by cutting expenses associated with its electric vehicles. Overall, because it continues to show remarkable capital allocation discipline and control costs, GM is one of the few automakers to outperform the S&P 500 in 2024.
GM seems well-positioned to handle these difficulties thanks to its strong financial health and effective operations, but only time will tell. With its robust lineup of vehicles, advancements in electric vehicles, and a record-breaking fiscal year expected, General Motors is still catching the interest of investors.
Technical Analysis
Source: TradingView
General Motors stock has been trending higher since October 22, currently trading above the EMAs (15, 65, & 200) at the time of writing and indicates that the uptrend is still strong. The stock pulled back after reaching a new high at $61.11 where the RSI formed a bearish divergence and is trading around support at $53.66.
If price makes a continuous move below support, traders will be watching for a potential trend reversal, where the zone around 50 could act as potential new support.
Price formed a double bottom with the November 6 level which indicates that the price could prepare to rebound. If the stock could stay above support, the stock might have the chance to try and recapture ground above $57 at the pivot line.
