Losses and plant closures
General Motors reported strong second-quarter results thanks to strong price increases for its pick-up trucks. However, the loss of $800m on the recall of nearly 69,000 Chevrolet Bolt EVs and the closure of GM factories due to chip shortages caused investors to evaluate negatively.
General Motors (GM) shares, up 39% YTD (as of Tuesday's close), fell 7.4% in early trading on Wednesday.
The US auto giant reported higher second-quarter 2021 earnings than the average forecast by Wall Street analysts and raised its full-year earnings growth forecast.
However, news of chip shortage problems and high losses due to the recall of nearly 69,000 units of the Chevrolet Bolt EV due to risks of battery fire in electric vehicles has dampened investor sentiment.
General Motors' earnings per share rose to $1.97 in the second quarter, but came in below analysts' estimates of $2.23. The automaker's total profit for the quarter was $2.8 billion, compared with a loss of $758 million a year earlier when a pandemic caused plant closures.
GM's quarterly revenue doubled to $34.17 billion on higher demand and prices, beating average analyst forecasts of $30.90 billion.
The company also raised its full-year 2021 earnings per share forecast to $5.40-$6.40, up from a previous forecast of $4.50-$5.25. However, this is still below Wall Street's estimate of $7.07 annual earnings per share.
GM on Tuesday confirmed that three of its pickup assembly plants in North America will be closed next week due to chip shortages. The problem will continue to affect the company's financial results both in the second half of this year and in 2022.
Ford (F), Tesla (TSLA) and Nikola (NKLA) have also reported similar supply problems.