For now, there’s still a lot that could keep General Motors (NYSE:) stock stuck in neutral. You could even reverse it.

First, the global chip shortage, which is having a big negative impact on the company’s operations. There are also the consequences of the Chevy Bolt recall due to an increased number of battery fires. Market-wide uncertainty is adding pressure.

What happens when these problems are resolved? It might be worthwhile to look at this stock.

For one, the chip shortage, expected to end by mid-2022, will only have a temporary impact on GM’s operations.

More importantly, what’s happening today does little to affect the company’s longer-term EV catalysts.

The company’s relentless push for EVs keeps it ahead of more innovative competitors. Investors may be willing to buy this stock at a low price, which has a forward value of 7.7x.

At today’s prices, I am neutral. Consider me bullish, however, if the share price drops to $30 or $40 per share, I am still neutral. (See GM stock charts on TipRanks)

Chip Shortage, Volt Recall

As you likely know, the global shortage of semiconductors has become a major issue for the automotive space. General Motors: How big of an effect is this?

The automaker had told investors in August that the shortage would have an impact on production of 100,000 vehicles by the second quarter of 2021. This estimate now stands at more than twice the level.

The automotive stock has been feeling more pessimistic about its future prospects. This news comes alongside the Chevy Bolt recall.

The Bolt has been subject to battery fires before. However, past recalls failed to solve the problem. There have been many more battery fire reports. General Motors was forced to recall all vehicles and stop production. This will result in the company spending $1.8 million to fix this problem.

Long-Term Catalysts Still in Play

Things may get worse for General Motors before they get better.

A general decline in stocks could have an impact on it. It trades at an attractive valuation relative to its market. However, this could also see multiple compression during a downturn. It could see a pullback that pushes it down to $30-40 per share.

This could happen. This would make it more difficult to account for the Bolt recall as well as the chip shortage. Once these headwinds fade next year, focus will shift to the company’s longer-term catalysts. 

Its move to electrify the company’s fleet and its share in autonomous vehicle startup Cruise (worth around $20 billion, based on its most recent funding round) are two examples.

Wall Street’s Take

According to TipRanks, GM stock has a Strong Buy consensus rating. It has a strong Buy rating from 14 analysts, while one analyst gives it a Hold.

The average GM price target is $72.40 per share, implying 36% upside from today’s prices. Price targets for analysts can range anywhere from $53 per Share to $90 Per Share.

Bottom Line

In the coming months, General Motors shares could decline further, as the factors making investors nervous today are still playing out.

After it moves back to a lower price level, and once current hiccups subside, GM stock could be a solid long-term play..

Disclosure: At the time of publication, Thomas Niel did not have a position in any of the securities mentioned in this article.

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