Headquartered in Detroit, Michigan, General Motors (or simply GM) was originally founded on September 16th, 1908 by William Durant. The company quickly consolidated several motorcar companies, and by 1929, it stood tall as America’s leading manufacturer of passenger cars, eclipsing the iconic Ford Motor Company. By 1931, GM had become the biggest manufacturer of motor vehicles in the world, and a symbol of American industrial prowess. Continued expansion in the next few years was also helped by its involvement in manufacturing military equipment during World War II. So influential was the company in the US, that it once said- ‘as goes General Motors, so goes the nation.’
GM accelerated growth in the 1950s and 1960s as the American economy experienced a booming phase, accounting for almost 50% of the domestic vehicle sales market. The entrance of cheap and fuel-economical Japanese cars into the American market in the 1970s and 1980s provided the biggest threat to GM dominance. The company responded by introducing the Saturn brand of sub-compact vehicles, with mixed success. The survival proved to be short-lived, and massive losses during the early 1990s led to the closure of many plants and substantial trimming of its workforce. The company posted an incredible recovery in the late 1990s, and by the turn of the millennium, it had regained its status as one of the biggest automotive companies in the world.
But, a drop in sales and resulting losses from 2005, compounded by the 2008 global financial crisis, saw GM file for bankruptcy protection in June 2009. The company came out of bankruptcy reorganisation just a month later and quickly implemented downsizing strategies such as discontinuing some car brands. On November 17th, 2010, the ‘new’ General Motors made its return to the stock market, listing on the NYSE, where it trades under the ticker symbol GM. The relisting of GM would go down as one of the biggest IPOs in the history of the United States. The stock is in the Consumer Cyclical sector, under the Auto Manufacturers industry.
GM Stock History
The GM stock IPO introductory price was $33, and as of September 2020, the company has never implemented any split. The stock quickly rose on demand and printed a high of just below $40 by January 2011, but the company was not out of the woods yet. A combination of recall woes as well as airbag and ignition scandals on their earlier products haunted the company and weighed down on the stock. It printed a low of just below $20 by July 2012. After that, the stock started a mini-rally, supported by stock buybacks and an improving business environment, that saw the stock retake highs of circa $40 by December 2013.
Recalls and repairs continued to weigh down on the stock in 2014 and triggered a sideways trend that would bottom out at circa $28 in February 2013. By December 2013, the US government had exited the company, and the stock maintained a positive trajectory that saw GM print its all-time high at circa $46 in October 2017. A sideways trend then followed, and in March 2020, the coronavirus inspired economic shutdown saw GM print its all-time low at circa $14. It quickly recovered and continues to sustain gains above $30 as of September 2020. GM has paid consistent quarterly dividends to stockholders since 2014, with its dividend yield rising to as high as 6.6% as its stock remained pressured lower. Dividends appeal to consistent income-seeking investors, but they typically limit significant stock price gains over the long run.
How to Trade GM Stock
General Motors is one of the most important companies in the US, with its stock attracting massive attention on Wall Street. Here are some of the factors to consider when trading GM stock:
- Legislative and Taxation Issues
As a major automotive manufacturer, GM has always seen its bottom line impacted by legislative and taxation issues. The government considers the industry as one of the most important to the American economy and people. It is, therefore, important to watch out for both positive and negative legislation or taxation shifts that may affect the auto manufacturing industry.
- Trade and Tariffs Agreements
GM sells its products worldwide and has a particularly strong presence in China, and to some extent, India. This exposes the profitability of the company to the risk of trade and tariff agreements between different jurisdictions around the world.
- Competitor Performance
GM faces tough competitors, such as Ford and Tesla, all putting their best foot forward to try to dominate the lucrative automotive market. Competition is on multiple fronts such as sustainability, driverless technologies and new product rollouts. It is thus important to watch competitor performance in relation to that of GM, to accurately determine both the short- and long-term business prospects of the company.
- Raw Materials Price Dynamics
As a manufacturing giant, GM utilises numerous raw materials such as steel, aluminium, copper, lead, resins and platinum group metals. As commodities that are subject to demand and supply forces, changing prices may have a significant impact on GM’s margins. It is important to watch for significant price changes in the major raw materials that make the bulk of GM components.
- Periodic Earnings Reports
GM’s fiscal year runs from January to December, and the company releases periodic (quarterly, semi-annual and annual) earnings reports ensuring that investors and stockholders are up-to-date with its business performance. It is important to track such reports because they can trigger significant price changes in the GM stock.
Additionally, with GM being a cyclical stock, it would be prudent to watch out for the short-term impact of these factors rather than their potential long-term impact.
AvaTrade South Africa GM Stock Trading Information
- MT5 Symbol: #GM
- Trading Hours: Monday – Friday (GMT) 13:30 – 19:59
- Country: US
- Currency: USD
- Exchange: NYSE
- Typical Spread: 0.13%
- Units: Stock
- Minimum Trade Size: 10
Why Trade GM stock with AvaTrade ZA?
Here is why you should trade GM on the multiple AvaTrade platforms:
- International Regulation
AvaTrade South Africa is regulated in 7 jurisdictions around the world. This is just one of the reasons why you can trade GM stock on our platforms with confidence.
- Leverage Trading
With a leverage offered on GM, you can capitalise on even marginal price changes.
- Go Long or Go Short
Trade GM stock as a CFD and take advantage of both rising and falling markets.
- Trading Conditions
Trade GM with AvaTrade ZA and enjoy transparent prices, competitive spreads and fast order execution at all times.
GM Stock FAQ
Why should I trade General Motors stocks?
General Motors is one of the largest auto manufacturers in the world, and its stock is highly liquid and popular among traders. The stock also tends towards volatility, making sharp moves rapidly and frequently. That makes the stock an excellent choice for traders of all styles. Day traders can benefit from the daily volatility seen in stocks, and scalpers can as well. Swing traders aren’t left out because the moves seen in the stock typically take several days to play out. If you want to trade the auto sector then GM stocks are one you need to watch.
Is General Motors the best automotive stock for trading?
There are literally dozens of auto stocks you could choose from to trade this sector. Most of them will be good trading targets too, but few will be better than GM when it comes to active traders. The stock is well known for its choppy nature over the past several years, which makes it a very good choice for scalpers, day traders, and even swing traders. Whether or not it is the best is up to you, mostly because the price action of stocks is always changing, so what’s the best this week might not be the best next week.
What’s the best strategy for trading General Motors stocks?
As of the end of 2020 GM stocks are in a nearly parabolic uptrend, coming off the lows set in March 2020 due to the COVID-19 pandemic. In fact, despite the stock trading flat for several years before 2020 due to flat sales and declining market stock, the stock is sitting near an all-time high at the close of 2020. We believe that is unsustainable as there is no fundamental change making the stock stronger now than it was prior to the pandemic. In fact, the opposite could be argued, that in fact GM is in worse shape at the end of 2020 than it was in at the start of 2020. With all that in mind our trading strategy would be to watch the stock for signs of weakness and pullback. Thankfully with AvaTrade you can use CFDs to take advantage of falling stocks.