Please ensure Javascript is enabled for purposes of website accessibility

Why General Motors Stock Is Down Today

By John Rosevear – Updated Apr 21, 2020 at 1:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When will GM's factories reopen? The answer is complicated.

What happened

Shares of General Motors (GM -5.08%) were moving lower on Tuesday, after news reports and statements from the United Auto Workers (UAW) labor union made it clear to investors that auto factories in the United States won't be reopening soon. 

As of 2:30 p.m. EDT today, GM's shares were down about 5.6% from Monday's closing price.

So what

GM, like most other automakers with factories in North America, shut down its plants in mid-March amid the onset of the coronavirus pandemic. For auto investors worried about the huge loss in revenue that GM and the others are suffering, the big question is: When will those factories reopen?

Officially, GM hasn't given a date, saying only that it's evaluating "week to week." But it's known to be in negotiations with the UAW, along with Ford Motor Company (F -3.60%) and Fiat Chrysler Automobiles (FCAU), trying to pull together a workable plan to restart production while protecting workers. 

Chevrolet Silverado pickup trucks on the assembly line at GM's Flint Assembly Plant in Flint, Michigan, last year.

GM's factories in North America have been shut down since mid-March. Image source: General Motors.

Last Friday, UAW president Rory Gamble drew a line in the sand: Any plan to reopen, he wrote, must allow workers who feel sick to self-quarantine without losing pay. 

The three companies haven't responded to that statement, at least in public. Investors shouldn't read too much into that: The traditional Detroit practice is that the automakers stay quiet during negotiations with the UAW, until the sides come to an agreement.

But it seems clear that there are some spirited discussions going on behind closed doors.

Now what

For all of its bluster, and notwithstanding its strike against GM last year, the UAW has good day-to-day working relationships with all three automakers. It's likely that they'll come to a deal fairly soon, but that deal may involve expensive accommodations for workers and limits on production volumes, at least for a while.

Here's the takeaway for investors: I think there's a good chance that some U.S. auto factories will restart sometime in May, or at least before the end of June. But it will be a slow, step-by-step process, and it may be many months before things are back to where they were before the COVID-19 outbreak. 

John Rosevear owns shares of Ford and General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
GM
$35.48 (-5.08%) $-1.90
Ford Motor Company Stock Quote
Ford Motor Company
F
$12.31 (-3.60%) $0.46
Fiat Chrysler Automobiles N.V. Stock Quote
Fiat Chrysler Automobiles N.V.
FCAU

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.