GM stock at lowest since 1954
Shares declined 15.1% as analysts raised questions about cash needs and the possibility of a future dip in market share.
NEW YORK - Shares of General Motors Corp. plunged yesterday, closing below $10 for the first time in more than half a century as investors shrugged off better-than-expected June sales and analysts raised concerns about the company's cash needs.
GM shares fell $1.77, or 15.06 percent, to close at $9.98. Their session low of $9.96 marked their lowest point since Sept. 13, 1954, when they hit $9.92, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.
On Tuesday, GM shares had surged as much as 12 percent. The automaker reported an 18.2 percent drop in sales from a year ago but retained its traditional U.S. sales lead over Toyota Motor Corp., which posted a 21.4 percent decline.
Analysts, who had expected a much steeper drop, said GM's sales were able to outpace those of most other automakers because of late-month incentives and double-digit gains in demand for certain small and midsize cars.
Deutsche Bank AG's Rod Lache said that while previous incentive programs had temporarily boosted GM's market share, they generally were followed by declines in sales.
"If history is any guide, we would expect GM's sales to experience 'payback' for the pulled-forward sales in the months ahead," Lache wrote in a note to investors. He said GM's market share could drop back to the 19-percent-to-20-percent range, down from its June level of 22.1 percent.
Meanwhile, Citi Investment Research analyst Itay Michaeli slashed his price target on GM shares to $14 from $21, citing liquidity fears.
"While we do not believe GM is facing an immediate cash crunch, the urgency to shore up liquidity to navigate through a difficult 2008-09 has risen significantly in recent months," Michaeli said in a note to clients. He kept a "hold" rating.
Ford Motor Co. did not fare as well as its rival. The Dearborn, Mich., automaker said its June sales plunged 27.9 percent, blaming surging gasoline prices for knocking its light-truck sales down 35.4 percent.
Ford shares fell 35 cents, or 7.43 percent, yesterday to close at $4.36, below a multidecade low of $4.41 set the day before.
Despite the sales drop, Lache said Ford remained the best-positioned among the U.S.-based automakers and had the required cash to ride out a drawn-out, industrywide slump.
"In addition, we continue to believe that Ford is the most 'fixable' of the three U.S. automakers - it has effectively consolidated itself to two brands, and we still see considerable cost-savings opportunities within the enterprise," Lache said.
June was a dismal month for the industry overall, which posted an 18.3 percent sales drop, according to AutoData Corp. Only Honda Motor Co. Ltd., whose lineup is tilted toward smaller and more fuel-efficient cars, managed to report a sales increase for June - slightly more than 1 percent.
The automakers' shares have taken a beating in recent weeks, hurt by rising oil prices, a weak U.S. economy, and a shift in consumer demand away from gas-guzzling light trucks and toward smaller, more fuel-efficient vehicles.