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General Motors Co.’s sales more than doubled in the second quarter and profit neared $3 billion, but the car maker spooked investors by striking a cautious tone amid the spread of the delta variant and the ongoing chip supply constraints.
The stock added to losses during GM
GM,
executives’ call with analysts, and was on track for its largest one-day percentage drop in nearly two months.
GM shares are down more than 16% from their record close of $63.92 hit on June 8, and traded as low as $53.42, making them the day’s worst performer on the S&P 500 index.
SPX,
GM earlier on Wednesday reported second-quarter earnings that beat Wall Street expectations and raised its adjusted EPS guidance for the full year, although that remained lower than FactSet consensus.
The “semiconductor situation does remain fluid,” Chief Executive Mary Barra told analysts on the call. GM told employees that some truck production will be impacted next week, and it continues to rely on “creative solutions” to minimize the impact of the shortage on its more popular SUVs and pickup trucks, she said.
But, with the spread of delta variant “we just don’t know” and GM is being “appropriately cautious,” she said.
“I think what you are hearing from us is sort of a very real acknowledgment of what we see out there with COVID,” Barra said. “It may turn out to be less impactful than we think it is, but I think the approach that we’ve taken to this has been pretty consistent … and we are cautious.”
The bar was high for GM coming into the earnings release, with quarterly beats for rivals Ford Motor Co. and Tesla Inc. GM also drummed up investor expectations in June, when it said it expected a “significantly better” first half of 2021 than it previously thought.
The stock still holds a comfortable lead over the S&P, up 26% this year compared with advance of 17% for the index. Shares are up 106% in the past 12 months, compared with a 33% gain for the S&P.
