Why Investors Need Not Worry About General Motor's Stock

General Motors Company GM is having its worst day in the markets since March 2020.

The slide in the stock is a result of the chip shortage and investors shouldn't be worried, Cerity Partners' Jim Lebenthal said Wednesday on CNBC's "Fast Money Halftime Report."

What Happened: General Motors reported quarterly earnings of $1.97 per share, which beat the estimate of $1.34 per share.

The company reported quarterly revenue of $34.2 billion, which beat the estimate of $29.11 billion.

General Motors said it expects full-year 2021 earnings to be in a range of $5.40 per share to $6.40 per share, which was below the estimate of $6.42 per share. 

Related Link: General Motors: Q2 Earnings Insights

Lebenthal's Take: The worse-than-expected guidance is a result of the uncertainty around the chip shortage, Lebenthal said. 

Lebenthal told CNBC that General Motors "crushed the revenue estimate, which indicates that they are selling cars hand over fist, but their margins were terrible and that's because of the chips." 

General Motors has great demand for new vehicles, but the company is unable to meet the demand because of the chip shortage, he added. 

Eventually, the company will start buying back shares and reinstate its dividend, Lebenthal noted. 

General Motors is currently trading at seven and a half times earnings, but Lebenthal said he thinks it should be trading at 10 times earnings and trading at $70 per share. 

GM Price Action: General Motors has traded as high as $64.30 and as low as $25.51 over a 52-week period.

At last check Wednesday, the stock was down 8.79% at $52.80.

Photo: Courtesy of General Motors.