The shares of Magna Worldwide (NYSE: MGA) plunged 11.6% this morning as panic gripped traders after President Donald Trump introduced plans to impose hefty import tariffs over the weekend, together with a 25% levy on imports from Canada and Mexico, with a ten% tariff on imports from China.
These markets are additionally a few of Magna’s most vital markets, which can clarify why the auto elements firm’s inventory slumped immediately.
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And a competitor simply painted a scary image, predicting that Trump’s tariffs might hit manufacturing within the North American auto trade and set off huge layoffs. Ouch.
Magna’s competitor fears the more serious below Trump
Magna Worldwide is headquartered in Ontario and is among the many largest publicly traded auto parts companies in Canada. Its monetary studies present that Mexico, Canada, and China are amongst Magna’s high 5 largest finish markets outdoors the U.S. In 2023, the three markets mixed accounted for practically 34% of Magna’s whole gross sales.
In an interview with The Globe and Mail, Linda Hasenfratz, the CEO of Canada-based Linamar, stated Trump’s tariffs can be borne by clients and can due to this fact make autos so expensive that it might hit demand exhausting. That would grind North American automobile manufacturing to a halt and set off hundreds of thousands of layoffs within the trade, she stated. Linamar is amongst Canada’s high automotive elements provider with in depth operations in North America.
Must you promote Magna inventory now?
Magna Worldwide inventory has been in a free fall over the previous 12 months or so, with its shares now down 35% in a single 12 months, as of this writing. A worldwide slowdown within the auto and electrical automobile (EV) trade was already hurting the corporate, so Trump’s strikes could not come at a worse time.
Nevertheless, he has but to impose the tariffs, and it is too early to foretell how deeply they may have an effect on Magna Worldwide. Buyers ought to look out for administration’s views and outlook when its fourth-quarter earnings are launched Feb. 14.
Magna reported flat gross sales for the 9 months that ended Sept. 30, 2024, regardless of a difficult enterprise setting, nevertheless it additionally downgraded its full-year gross sales steerage barely to $42.2 billion to $43.2 billion. The corporate generated $42.8 billion in gross sales in 2023.
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Neha Chamaria has no place in any of the shares talked about. The Motley Idiot recommends Magna Worldwide. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
