General Motors Down 14 Percent Since Barra Took Over; Don’t Blame Her

Updated on

While Microsoft Corporation (NASDAQ:MSFT) appointed a new CEO at roughly the same time as General Motors Company (NYSE:GM), the two companies’ stock prices are going in opposite directions. Satya Nadella has seen Microsoft gain roughly 13% while Barra has seen a 14% drop.

Nadella has done nothing notable to explain these gains whereas Barra has been forced to deal with the recall of 1.6 million cars whose faulty ignition switches have caused at least 12 deaths, slow sales in Europe, Volkswagen AG (ADR) (OTCMKTS:VLKAY) (ETR:VOW)’s gains in China, and working through a slow start in domestic 2014 sales owing to the bitter cold that has plagued much of the nation.

In a recent telephone interview with Bloomberg, Matt Stover, an analyst with Guggenheim Securities LLC, pointed to Ford Motor Company (NYSE:F) which is down 6.5% since Barra’s appointment suggesting that the recalls aren’t the reason that General Motors Company (NYSE:GM) is flailing, “The reason General Motors’ stock is down has more to do with the fundamentals,” he said.

What’s plaguing General Motors?

To date, the redesigned Chevrolet Silverado has failed to impress the public, and even Cadillac, which has enjoyed a recent upsurge, is seeing slowed sales. In Europe, General Motors Company (NYSE:GM) is looking to stop losing money. The automaker has lost nearly $20 billion since the turn of the century and has decided to stop production of Chevrolet branded cars altogether in the interest of pushing its Opel line to fight off Volkswagen.

Barra’s “belle of the ball” status that accompanied her being named to the top post at General Motors during the Detroit auto show has been yanked out from under her. Her honeymoon began with reporters gushing over her, Hillary Clinton praising her for breaking through the “steel ceiling;” now it appears the honeymoon is truly over for Ms. Barra.

“She was the big star of the auto show,” David Whiston, an analyst with Morningstar Inc., told Bloomberg earlier this week. “A month after the auto show, there’s this huge crisis put on her plate.”

While a visit to the White House or the Smithsonian is a fun trip to Washington D.C., facing questions before Congress is considerably less fun. That is precisely what Barra will need to do when she heads east next week. In addition to the scheduled congressional hearings, General Motors is under the microscope of the National Highway Traffic Safety Administration for the aforementioned recall. They also face a bevy of lawsuits and a DOJ probe.

While last week saw a low point for General Motors Company (NYSE:GM)’s stock which picked up over 40% last years. Looking at the numbers, however, shows that General Motors’ slide began well before the recalls and investigations.

Leave a Comment