The stock market is supposed to be an efficient machine that takes all available information and immediately reflects it in share prices. The reaction to recent earnings from auto suppliers shows it doesn’t always work that way.
The latest example came on Thursday, when the auto parts supplier Aptiv reported an operating profit of $560 million from sales of $5.1 billion, while Wall Street was looking for about $570 million and $5.1 billion respectively. Everything was essentially in line with expectations, especially considering that Aptiv lost some sales as a result of the United Auto Workers’ strike against the Detroit Three car manufacturers, which began on Sept. 15.
Worry about demand for electric vehicles appears to be behind the loss. Aptiv is supposed to grow faster than the overall auto market because it sells more parts on electric vehicles than on traditional cars, so slowing growth in EV sales is bad news. Ford Motor , General Motors , Volkswagen , and Mercedes-Benz have all signaled concern over EV demand in recent weeks. ON Semiconductor stock has fallen almost 20% since the company provided weak financial guidance on Monday.The point is that Aptiv investors aren’t necessarily the same people who follow ON Semi or Tesla. Those groups don’t always pay attention to each other.