Shares of auto-industry supplier BorgWarner (BWA 2.10%) were rising on Monday amid a broad-based rally as investors saw signs that the economic impact of the coronavirus pandemic might not be quite as severe as feared.
As of 1:30 p.m. EDT today, BorgWarner's shares were up about 14.5% from Friday's closing price.
As auto investors know, the prospects (and stock prices) of big auto suppliers like BorgWarner tend to rise and fall with those of the overall auto industry. Right now, with most automakers' factories in the U.S. and Europe shut down due to the COVID-19 pandemic, BorgWarner isn't shipping many parts, and it isn't generating much revenue.
That's not good, obviously, and it's most of the reason the company's share price has fallen over 40% since Jan. 1.
But if the strict social-distancing measures in place in most U.S. states and Canada are starting to bring the pandemic under control, then it's possible that things will be back to "normal" before the end of the year.
A less-bad-than-feared economy also makes it more likely that BorgWarner's acquisition of rival Delphi Technologies (DLPH) -- which was called into question last week after Delphi drew down its line of credit without asking BorgWarner first -- will proceed. And that would be good news for both companies' stocks.
Investors will have to wait a few more weeks for a full update from BorgWarner's management. The company is scheduled to report its first-quarter earnings before the market opens on May 6.