Pre-market actions: car manufacturers are now technology companies
But investors are starting to view these industrial giants as nimble startups, as they invest heavily in electric cars and autonomous driving that could pay huge dividends.
The numbers: Shares of General Motors, which spends $ 35 billion on electric vehicles by 2025, have skyrocketed in the past year, rising nearly 140%. Ford’s stock also rose 140% over the same period.
Volkswagen shares have risen 50% in the past year. Europe’s largest automaker is investing 35 billion euros ($ 42 billion) in electric vehicles over five years. It plans to open six battery-manufacturing “giga-factories” in Europe by 2030.
But the big automakers, including General Motors, are starting to be seen the same way as they commit to building battery factories.
Dan Ives, analyst at Wedbush Securities, said Thursday that General Motors shares are expected to be worth $ 85 apiece, a 52% increase from current levels. Why? Because CEO Mary Barra is all about electric cars.
“While the early part of his tenure saw significant dips and slowdowns, the focus on electric vehicles gave GM new energy and strategic direction,” Ives wrote in a research note.
He said the company’s stock price is expected to continue to rise because “the street treats the Detroit automaker no longer as a traditional book value-based automaker, but as a larger disruptive tech game that can start trading at multiples similar to Tesla’s. “
If you are the CEO of an automaker, the right thing to do now is announce a big investment in EVs and watch your stock price go up.
The company predicts that 70% of its sales in Europe and 40% of its sales in the United States will be fully electric or plug-in hybrids (but with a large majority of these fully electric vehicles) within four years, CEO Carlos said. Tavares. mentionned.
“[The plan] is among the most aggressive electric vehicle engagements the industry has ever seen, ”said Karl Brauer, Industry Analyst at ISeeCars.com.
Investors, meanwhile, must determine which of these electric dreams will come true. One factor to consider is that the biggest automakers (General Motors and Volkswagen belong to this group) will be able to use the profits of their existing huge companies to invest in electric vehicles.
Their smaller electric rivals might not be able to keep pace.
Suddenly fear takes hold of Wall Street
In the United States, the Dow Jones closed 0.8% lower, or 260 points, while the S&P 500 was down 0.9%. The Nasdaq Composite fell 0.7%. All three indices had suffered much larger declines earlier today.
Investors continued to invest money in the safety of US government bonds, sending yields to their lowest level in five months. At 1.25%, the 10-year Treasury yield has not been this low since February. That’s down significantly from its 52-week high of 1.77% set in March, when inflation fears were rampant.
Franziska Palmas, a markets economist at Capital Economics, said the pullback of risky assets could be attributed to growing evidence that shortages are holding back economic growth in the United States, signs that growth in China is slowing and the spread of continued. the Delta variant.
Where do we go from here? Palmas said that with expectations of strong economic growth already embedded in the markets, she sees “little scope for risky assets to continue to make significant gains over the next few years.”
But at the same time, she doesn’t expect stocks to fall sharply. Indeed, central banks will continue to provide considerable support to the economy and the recovery is expected to continue at a rapid pace.
“Taking all of this together, we still expect stocks to generally gain ground by the end of 2023, but we believe the gains will be much smaller than in the last year,” he said. she declared.
Catering workers quit en masse
In May, the exit rate per job share in the accommodation and food services industry, which includes restaurants, was 5.7%, according to seasonally adjusted data released this week by the Bureau of Labor Statistics. . This figure remained stable from the previous month and is higher than the quit rate in all sectors, which fell from 2.8% in April to 2.5% in May.
Catering workers have gone through a difficult time during the pandemic. Servers in particular are at risk of contracting Covid-19 when interacting with customers. On top of that, they had to watch out for customers who pushed back against masking or social distancing policies.
“People had to work harder to show that they were friendly and welcoming, despite their smiles being covered with a mask,” said Alicia Ann Grandey, a professor of psychology at Penn State who specializes in work matters. . “Trying to adopt this friendly attitude, even in the face of stress at work and hostile customers, is linked to turnover,” she added.
With a high rate of employees quitting, others could follow, according to those who study labor relations, perpetuating the high rates. To keep them on board, restaurants may need to improve their offerings.
Data on wholesale inventories in the United States will be released at 10:00 a.m.ET.
Coming next week: US inflation data for June. Plus, retail sales.