GM Stock Price Jumps Ahead Of Possible 870,000 Vehicle Recall

By Douglas A. McIntyre Published Jan 20, 10:40AM EST

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GM Stock Price Jumps Ahead Of Possible 870,000 Vehicle Recall — © JHVEPhoto / iStock Editorial via Getty Images

Generally, large recalls are bad for a car company’s reputation and its bottom line. General Motors (NYSE: GM | GM Price Prediction) is facing a huge recall of as many as 870,000 vehicles. These include the models in question: the 2019-2024 Model Year Chevrolet Silverado 1500 and GMC Sierra 1500 pickups along with the 2021-2024 model year Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon, and Cadillac Escalade SUVS.

The NHTSA Office of Defects Investigation has received 39 reports, which include engine warnings in the vehicles. The description of the problem is “bearing failure that may result in either engine seizure or breaching of the engine block by the connecting rod.” The loss of power could cause an accident. The Detroit Free Press writes, “GM said it would continue to cooperate with NHTSA on the matter.”

Warranty problems are not unheard of. Huge recalls can trigger large changes to earnings, which makes them worrisome to investors. Ford’s (NYSE: F) warranty write-offs were into the hundreds of billions of dollars last year.

GM has been able to ride its success over the last year to a stock run up of 43%. This compared to a 10% drop in Toyota’s (NYSE: TM) shares and a Ford stock fall of 9%. Any large write-off could dent the large increase in Ford’s shares

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.