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General Motors Stock: Upside is Limited

General Motors stock

General Motors (NYSE: GM) stock has been experiencing a bearish trend over the past twelve months due to several reasons. The declining trend from Chinese business, increasing market competition and lower than expected deliveries are among the headwinds for GM share price. Its shares accelerated the selloff since the beginning of this year.

GM share price selloff is supported by the latest reports of declining Chinese sales and a 6% drop in Q4 deliveries. General Motor stock is currently trading around the lowest level in the past 52 weeks. Its shares are down more than 7% since the beginning of this year; the stock is down almost 2% in the past twelve months.

GM General Motors Company daily Stock Chart

Several Headwinds are Impacting General Motors Stock Performance

The market reports are suggesting another bad year for the GM China business. The company also warned that it could experience a decline in sales from the world’s biggest auto market. This is because of fierce competition in its key mid-priced SUV segment and trade war fallout. T

The company also reported a vehicle sales decline of 15% to 3.09M in 2019, representing a second straight annual decline.

Matt Tsien, Shanghai-based head of GM’s China business said, “We expect the market downturn to continue in 2020, and anticipate ongoing headwinds in our China business.”

On the other hand, General Motors reported Q4 deliveries of 735,909 units, down 6.3% from the year-ago period. It’s North American wholesales declined by 25% year over year in Q4, driven by the 40-day UAW work stoppage. The company’s new heavy-duty full-size pickups saw a 17% drop during the strike-impacted period.

The upside is Limited for GM Share Price

GM share price is unlikely to experience a huge boom in the first half of this year. Problems related to China along with consumers move towards electric vehicles are likely to impact GM stock price. Its financial numbers are also likely to add to bearish sentiments. Lower sales could create a negative impact on earnings and cash generation potential.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.