General Motors (GM) - Get General Motors Company (GM) Report shares fell Monday after the giant Detroit auto maker said it would omit fuel-management modules from some 2021 light-duty, full-size pickup trucks because of the global semiconductor shortage.
The module’s absence will cut fuel economy for affected vehicles by one mile per gallon, GM spokeswoman Michelle Malcho told Reuters. But the change won’t affect production numbers.
GM recently traded at $58.01, down 2.1%. The stock has soared 86% in the past six months amid enthusiasm over GM’s strong management and execution and its commitment to electric vehicles.
Purdue Engineering Prof. Carol Handwerker wrote on TheStreet.com Saturday that U.S. semiconductor manufacturing capacity is in the midst of a decades-long decline.
Meanwhile, Tesla has temporarily halted production of its Model 3 electric cars at its Fremont, Calif., assembly plant for two weeks - something that Wall Street speculates may have to do with the ongoing semiconductor shortage.
Morningstar analyst David Whiston puts fair value for General Motors at $59.
“We think General Motors' vehicles are of the best quality and design in decades,” he wrote in a commentary last month.
“The company is already a leader in trucks, so a competitive lineup in all segments, combined with a much smaller cost base, says to us that GM is starting to realize the scale to match its size.
"The head of Consumer Reports automotive testing even said Toyota (TM) - Get Toyota Motor Corp. Sponsored ADR Report and Honda (HMC) - Get Honda Motor Co., Ltd. Sponsored ADR Report could learn from the Chevrolet Malibu.
“We think GM's earnings potential is excellent because the company has a healthy North American unit and a nearly mature finance arm with GM Financial.”