by Wolf Richter Jul 26, 2018
Suddenly it gets ugly – but these are still the good times.
It’s confession time among the Detroit automakers: GM, Fiat Chrysler, and Ford all got ugly, in unison, in one day, something we haven’t seen since the Financial Crisis.
Back at the end of May, GM shares (GM) were trading at $38 when it announced that SoftBank, the Japanese company that is blowing borrowed billions left and right, would invest $2.25 billion in GM’s self-driving car unit Cruise. By June 11, GM shares had shot up to $45. But this morning they’re at $37.16. That’s a 17% plunge from June 11, including the 5% drop Wednesday and today.
In its earnings report Wednesday morning, it lowered its profit outlook for 2018 by 5% to 9%, as its operating profits in its North America business plunged 23% in the quarter. GM’s “adjusted” profits had hit a record in 2017 of $12.8 billion. That record is now moving out of reach.