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GM stock has added approximately 66%, and 17.5% in the past year and year to date respectively, but has dropped approximately 22%, and 10% in the past three months and one month respectively.
General Motors Company (NYSE: GM) stock closed yesterday trading at $48.95, down 0.33% from the day’s opening price. GM stock faces a bleak future, particularly in the short term perspective, after the company announced that it will be closing its production assemblies in two continents due to a semiconductor chip shortage. Notably, the company said that it will shut down production plants across the United States, Canada, and Mexico for two weeks starting September 6. However, the company anticipates production will resume by the end of September should plans go as planned.
“These most recent scheduling adjustments are being driven by the continued parts shortages caused by semiconductor supply constraints from international markets experiencing COVID 19-related restrictions,” the company said in a statement. “During the downtime, we will repair and ship unfinished vehicles from many impacted plants, including Fort Wayne and Silao, to dealers to help meet the strong customer demand for our products.”
GM Stock and the Global Chip Situation
The situation is not special for the company as other automotive companies including Ford Motor Company (NYSE: F) recently announced a production cut due to similar challenges. Global companies that deal with semiconductor chip production gave more focus to electronics that saw a huge demand during the past year.
Notably, the coronavirus pandemic caused a huge demand for laptops to enable remote working, schooling, and socializing. However, the demand for new vehicles was reported to have declined as more people remained indoors.
Further, more institutional investors have proliferated in the crypto mining industry as the global adoption of digital assets scales higher. More crypto mining rigs meant a spike in demands for semiconductor chips that otherwise would have gone into the automotive industry.
“Although the situation remains complex and very fluid, we remain confident in our team’s ability to continue finding creative solutions to minimize the impact on our highest-demand and capacity-constrained vehicles,” the company said.
The company’s stock market risk tumbling further in the following quarters as the revenue at the end of the quarter will significantly be adjusted. GM stock has added approximately 66%, and 17.5% in the past year and year to date respectively, but has dropped approximately 22%, and 10% in the past three months and one month respectively.
Tesla Inc (NASDAQ: TSLA) CEO Elon Musk compared the chip shortage situation to the tissue saga at the beginning of the coronavirus crisis last year. “Never seen anything like it,” Musk tweeted. “Fear of running out is causing every company to overorder – like the toilet paper shortage, but at an epic scale.”