GM Earnings Due. UAW Strikes At Heart Of Rival Stellantis.

General Motors (GM) plans to report earnings for the third quarter early Tuesday, after warning that the ongoing strike by autoworkers took a heavy cost in September. GM stock, near multiyear lows, fell on Monday.

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General Motors Earnings

Estimates: Analysts expect GM earnings to slide 17% to $1.87 per share, according to FactSet. Revenue is seen growing 1%, year over year, to $42.482 billion.

That would mark the lowest sales growth in seven quarters.

Results: Check back Tuesday before the open.

Outlook: Wall Street expects full-year adjusted EBIT of $13 billion, which is right at the midpoint of General Motors’ guidance of $12 billion-$14 billion.

GM also said in July that it expects adjusted automotive free cash flow of $7 billion-$9 billion.

On a per-share basis, Wall Street sees full-year EPS of $7.36, a 3% decrease vs. 2022, FactSet shows.

GM Stock

Shares of General Motors shed 1.5% to 29.22 in Monday’s stock market action.

Ahead of the Q3 earnings report, GM stock remains mired in a 21-month consolidation, trading at its lowest level since October 2020.

On Monday, the United Auto Workers union said it is expanding its strike to a Stellantis (STLA) plant in suburban Detroit that produces the bestselling Ram 1500 full-size pickup trucks. The union said 6,800 UAW members walked out, “shutting down production at Stellantis’ largest plant and biggest moneymaker.”

Stellantis stock rose 0.3% Monday, holding just above the 50-day moving average. STLA stock is on the IBD 50 list of top growth stocks.

UAW Strike, EV Shift

On Oct. 4, General Motors set up a new $6 billion line of credit to bolster its balance sheet, while girding for further strikes by the United Auto Workers union.

The UAW strikes, which started Sept. 15, cost GM $200 million in September, the company said. Loss estimates are still climbing, now above $500 million and rising for GM and Ford (F), as walkouts at car plants and car parts factories stretch deep into October.

On Oct. 20, the UAW leaders reported progress in contract talks with the Detroit 3 automakers, but said that “these extremely profitable companies have more to give.”

The UAW strike could hardly have come at a worse time for GM, Ford and Chrysler parent Stellantis (STLA).

Rising bond yields and the new Middle East war are chilling investor sentiment. Even before that, analysts feared high inflation and interest rates are starting to weigh on car buyers, though Q3 U.S. sales stayed strong due to pent-up demand, especially for GM.

Auto loan performance in September saw delinquencies increase, although defaults declined.

All that adds up to a serious downshift in momentum for the transition out of fossil-fuel cars and into electric vehicles. Globally, traditional automakers are making a bold and risky transition to electric cars.

In fact, both GM and Ford have scaled back investments this year on developing electric vehicles and building out EV battery factories.

On Oct. 18, even the Tesla (TSLA) growth story showed signs of wilting. The EV leader tapped the brakes on new construction.

“We want to get a sense for what the global economy is like before we go full tilt on the Mexico factory,” Tesla CEO Elon Musk said.

Musk added that he was worried about the impact of high interest rates on car buyers.

Amid rising woes, GM stock sank Oct. 19 to its lowest level since October 2020.

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