Tesla is gearing up for the highly anticipated launch of its Cybertruck, which marks a significant milestone for the electric vehicle manufacturer. With this move, Tesla ventures into the profitable territory of Ford Motor and General Motors.
It’s important to note that the stock performance of all three companies will likely be influenced by this event. However, contrary to popular belief, Tesla’s stock is likely to experience a decline following the launch. This isn’t indicative of any disappointment with the Cybertruck itself, but rather a result of starting points and historical trends.
Looking back at the past, we can observe a pattern. When the Cybertruck was unveiled in November 2019, Tesla’s stock plummeted by over 6%. The unconventional design of the vehicle raised concerns among investors. Prior to the unveiling, the stock had risen by approximately 2%. It took some time for the shares to fully recover.
Moreover, in October 2022, Tesla experienced an almost 9% drop in stock value following its second artificial intelligence day. While the event showcased the Optimus humanoid robot prototype and presented in-depth technical details, investors were not particularly captivated by any groundbreaking moments.
Similarly, Tesla’s stock decreased by almost 6% after the March 1 analyst event, which featured more management insights and an unexpected announcement about an assembly plant in Mexico. Prior to the analyst day, shares had enjoyed a 65% increase for the year.
However, it’s worth mentioning that positive outcomes have also occurred. Following the first AI day in August 2021, which featured a human in a robot costume engaging in a dance routine, Tesla’s stock witnessed a 1% gain. Paradoxical as it may seem, this seemingly unusual reaction should be attributed to the fact that shares were down approximately 7% in the week leading up to the event.
Investors should bear in mind that the stock market tends to focus on the future rather than the past. The impact of the Cybertruck, overall labor trends, economic considerations, interest rates, and other factors have already been factored into the shares of automobile manufacturers.
Ford and GM Stock Outlook: Cybertruck Disruption Effects
On Thursday, Ford and GM stock will likely experience a surge. This may seem counterintuitive as Tesla’s Cybertruck represents a potential disruption in the truck market, which could negatively impact GM and Ford’s truck businesses. Moreover, the specifications of the Cybertruck may outshine those of the electric versions of both the Chevy Silverado and the F-150 Lightning.
However, the actual launch of the Cybertruck might not be enough to convince investors that it will significantly impact the traditional truck-buying market.
Fortunately for Ford and GM, fears of this disruption may not be as widespread as initially anticipated. This would undoubtedly have a positive impact on their stocks, which have already suffered due to concerns regarding labor and the economy.
As of midday trading on Wednesday, Ford and GM shares were down approximately 29% and 17% respectively since July, when labor concerns began affecting investor sentiment. However, both companies reached new labor agreements with the United Auto Workers in October, which were subsequently ratified by UAW members in November.
Following GM’s recent announcement outlining the long-term effects of these new labor deals, GM and Ford shares experienced an uptick of around 10% and 3% respectively during midday trading on Wednesday. Although costs will increase by about $600 per vehicle over the life of the contract (which runs through April 2028), GM plans to counterbalance these increases through productivity and cost enhancements in other areas.
Taken as a whole, the overall impact appears to be well-managed. This outcome is also more favorable than what investors initially anticipated.