In this article, we discuss the 5 auto companies facing the worst declines amid global chip shortage. If you want to read our detailed analysis of these stocks, go directly to 10 Auto Companies Facing Worst Declines Amid Global Chip Shortage.
5. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 28
Stellantis N.V. (NYSE:STLA) is ranked fifth on our list of 10 auto companies facing the worst declines amid global chip shortage. The company makes and sells different types of automobiles and is headquartered in the Netherlands. The evidence of the firm being affected by the chip shortage is evident from the fact that it has modified the default specifications of the Ram 1500 pickup it makes. The truck, which came with a digital rear-view mirror that used an electronic chip, is now an optional upgrade.
On September 4, investment advisory DA Davidson kept a Buy rating on Stellantis N.V. (NYSE:STLA) stock with a price target of $50. Peter Heckmann, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $844 million in Stellantis N.V. (NYSE:STLA), up from 21 in the previous quarter worth $751 million.
4. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 34
NIO Inc. (NYSE:NIO) is a China-based company that engages in the development and marketing of electric vehicles. It is placed fourth on our list of 10 auto companies facing the worst declines amid global chip shortage. In early September, the company posted delivery numbers for the month of August, reporting deliveries of 5,880 vehicles in August, down from 7,931 cars in July. The firm blamed “uncertainty and volatility of semiconductor supply” as the main reason behind the drop.
On August 12, investment advisory Bank of America maintained a Buy rating on NIO Inc. (NYSE:NIO) stock with a price target of $62, raising the 2022 volume forecasts for the firm and appreciated the “solid” third quarter guidance of the firm.
At the end of the second quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $2 billion in NIO Inc. (NYSE:NIO), up from 28 in the preceding quarter worth $1.3 billion.
In its Q2 2020 investor letter, McLain Capital, an asset management firm, highlighted a few stocks and NIO Inc. (NYSE:NIO) was one of them. Here is what the fund said:
“Nio, Inc. (NIO): It’s stock up 360% since the beginning of June on no news, and one of our more troublesome short positions, the Chinese electric vehicle manufacturer is valued at a whopping $17bln on trailing revenue of only $1.1bln. In 2019, the business ran a -17% gross margin, a -140% EBITDA margin & burned ~$1.5bln in cash in 2019. The stock has become one of the most popular stocks among retail traders with approximately 250,000 accounts holding the name just on the popular Robinhood trading platform.”
3. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 55
Ford Motor Company (NYSE:F) is a Michigan-based company that makes and sells a range of automobiles, including cars and trucks. It is ranked third on our list of 10 auto companies facing the worst declines amid global chip shortage. In April, at the height of the chip shortage crisis, the president of the company, Jim Farley, said that the full recovery of the auto chip supply would stretch into the fourth quarter of this financial year, and possibly even into 2022. He added that making industry volume recovery in the second half of this year was challenging.
On July 16, investment advisory Bank of America maintained a Buy rating on Ford Motor Company (NYSE:F) stock and raised the price target to $18 from $17. John Murphy, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $2.10 billion in Ford Motor Company (NYSE:F), up from 49 in the preceding quarter worth $2.19 billion.
In its Q1 2020 investor letter, Greenlight Capital Fund, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla, Inc. (NASDAQ:TSLA) is placed second on our list of 10 auto companies facing the worst declines amid global chip shortage. The firm engages in the development and sale of electric vehicles and is headquartered in California. In the second quarter earnings call, Elon Musk, the chief of the firm, said that the company had halted production of electric vehicles at the factory in Shanghai due to the chip shortage. The firm has made tweaks to software and is looking to source chips from alternative suppliers to keep up the production and sales of EVs.
On September 17, investment advisory Wedbush reiterated an Outperform rating on Tesla, Inc. (NASDAQ:TSLA) stock with a price target of $1,000, noting that the demand story for the EVs manufactured by the company was just starting to play out.
At the end of the second quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $9 billion in Tesla, Inc. (NASDAQ:TSLA), down from 62 in the previous quarter worth $10 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
1. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 86
General Motors Company (NYSE:GM) is ranked first on our list of 10 auto companies facing the worst declines amid global chip shortage. The firm designs, builds, and sells automobiles and is headquartered in Michigan. The sales of the firm for August this year declined by 33% year-on-year due to the chip shortage crisis, the firm revealed this month. Earlier in the year, the firm had said it expected earnings to be cut by $1.5 billion this year due to the chip crisis.
On August 5, investment advisory Deutsche Bank maintained a Buy rating on General Motors Company (NYSE:GM) stock with a price target of $68, identifying the firm as a “short-term investment idea” in a letter to investors.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in General Motors Company (NYSE:GM) with 34 million shares worth more than $2 billion.
Junto Investments, in its Q4 2020 investor letter, mentioned General Motors Company (NYSE:GM). Here is what the fund has to say about General Motors Company in its letter:
“General Motors was the biggest gainer. We managed to buy it at a screamingly cheap price in the middle of March. A lot of interesting news has emerged about GM recently, including the new electric product delivery system BrightDrop and GM Cruise’s team-up with Microsoft Azure to commercialize self-driving cars in 2021. GM’s intrinsic value is crystallizing and the company is worth a whole lot more than is still reflected in the market.”
You can also take a peek at 12 Best Big Tech Stocks to Buy Right Now and 10 Stocks That Just Received Sell Rating from Analysts.
