U.S. auto companies lose value amid market plunge
U.S. automakers weren’t immune to a white-knuckle day in the stock market during which the Dow Jones industrial average took a brief, record 1,600-point plunge.
The Detroit Three and Tesla all closed down at least 3 percent Monday following a slump that continued from Friday and marked the end of a record-setting surge in the stock market.
On a day when the Dow ended trading with a 1,175.21-point drop to close down 4.6 percent, Fiat Chrysler Automobiles took the biggest hit among the carmakers, closing the day down 4.5 percent at $21.29. Ford Motor Co. stock lost 4.4 percent at $10.24. General Motors Co. was off 3.6 percent at $39.54, down 3.56 percent. Tesla lost 3.1 percent to $333.13.
All four have lost billions in market capitalization since the decline began last week. A company’s market capitalization is calculated by multiplying the total number of shares by the stock price.
Ford, which has been struggling to move the needle on Wall Street for over a year, had lost $2.65 billion in market capitalization since the market’s close Thursday, according to Marketwatch.com. GM had lost $4.1 billion in market capitalization in the same time period. Fiat Chrysler lost $4.61 billion in market capitalization since Thursday. Tesla had lost $2.71 billion in market capitalization at close Monday.
GM on Monday remained the highest-valued among the four, with a market cap of $58.24 billion.
The stock corrections affect the Detroit Three more than many established companies, according to David Sowerby, managing director and portfolio manager at Ancora Advisers LLC. “As a rule of thumb, your more cyclical stocks are going to take a harder hit,” Sowerby said.
That’s even if the market seems to be correcting itself after a two-year rally. With the Detroit Three battling in the market for relevance as technology companies grab up investor dollars, the market began to correct itself just as two of the companies — GM and Fiat Chrysler — had started to gain traction.
Compared to its crosstown rivals, Sowerby said Ford took a harder hit during the dip.
“The market has been on a pretty impressive rally,” he said. “Combined with higher-than-expected interest rates, you begin to see why the market could go through a couple of painful days.”