The negotiations have been almost as rancorous as they’ve been ongoing. But with little hope of averting a strike in sight, the United Auto Workers prepare to walk off the job and put a serious crimp into the overall economy as well. With a strike now all but inevitable, several firms are on the firing line. While the major figures—Ford (NYSE:F), General Motors (NYSE:GM), and Stellantis (NYSE:STLA)—all lost ground in Thursday afternoon trading, Carvana (NASDAQ:CVNA) was up over 12% at one point.
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The deadline is Thursday night at 11:59 P.M., which means many of us may wake up tomorrow to news of a UAW strike already in progress. The UAW has been facing one of the strangest landscapes it’s had to face in some time; the rise of electric vehicles is reducing demand for gas engines and moving it over to batteries instead. Many of these plants, however, aren’t union shops, giving the UAW a lot less leverage. Both sides have accused each other of a variety of unfair practices, and the UAW has even filed charges against Stellantis and GM but not Ford.
The damage from such a strike will extend beyond the factory floor. Dealerships of all stripes, including the surprisingly-up Carvana, will face a return to strictured supply chains and difficulty stocking cars. Of course, that also comes at a time when the consumer is already beaten down by skyrocketing inflation, so demand destruction may come at the same time supply freezes hit, balancing each other out. Still, this will likely only prolong the inevitable, as eventually, no new car production means no new car purchasing.
Nevertheless, we can see that the situation is producing various potential results here. Carvana may have gained the most today, but this consensus Hold still comes with a potentially disastrous 26.68% downside risk, thanks to its average price target of $40.47. Meanwhile, Stellantis–the only Strong Buy in the bunch–offers only the second-largest upside potential at 28.24% against an average price target of $24.02.
