Bank of America now says the strike at GM will cost the automaker $3.25 billion - its biggest estimate yet
- The six-week-long strike of more than 48,000 General Motors workers could cost the company more than $3 billion - the largest estimate yet - according to a new analysis from Bank of America Merrill Lynch.
- The firm's analysts expect the automaker to take a $750 million hit to operating income in the third quarter, and another $2.5 billion loss in the fourth quarter.
- The number is derived from an estimated total loss of production of a little less than 350,000 vehicles and a contribution margin per vehicle between $10,000 and $12,000, according to the firm's analysis.
- Shares of GM rose as much as 2.5% on Wednesday after the United Auto Workers union announced the two parties had agreed on a proposed tentative labor deal.
- Watch GM trade live.
The United Auto Workers strike could cost General Motors as much as $3.25 billion - the largest estimate yet - according to a new analysis from Bank of America Merrill Lynch.The strike, which is closing in on its sixth week, could cost GM $750 million in operating income for the third quarter and another $2.5 billion during the fourth quarter, the firm's analysts wrote in a note to clients on Thursday.Advertisement
The figure comes from an estimated total loss of production of a little less than 350,000 vehicles and a contribution margin per vehicle between $10,000 and $12,000, according to the firm's analysis.
The estimate is also based on the assumption that a tentative deal that was announced on Wednesday will be ratified by next week, BAML said.Based on the updated forecast, the bank also slashed its 2019 earning's per share estimate to $4.95, from $6.85.
About 48,000 GM workers began striking in mid-September due to disagreements over pay, healthcare costs, and automaker's use of temporary workers.The UAW GM National Council was scheduled to meet privately on Thursday to vote on a proposed labor deal that would end the strike. Shares of GM are up about 8% year-to-date. Advertisement
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