Source: Katherine Welles / Shutterstock.com
General Motors (NYSE:GM) will supply a fleet of 800 Chevy Bolt electric vehicles (EVs) to Domino’s (NYSE:DPZ) to use as delivery vehicles. The deal starts with an initial “more than 100 custom-branded” 2023 Bolts and will see the other 700 EVs delivered in the ensuing months. The news is sending DPZ stock up more than 2% so far today. Meanwhile, GM stock is down by about 1%.
Right now, General Motors and Domino’s are both trying to regain investor confidence. Here’s what investors should know as shares trade today.
GM Stock: Are General Motors and Domino’s Comeback Kids?
Long ago, Tesla (NASDAQ:TSLA) replaced General Motors as the world’s most important car maker. GM has roughly one-tenth of Tesla’s market capitalization at around $56 billion. Its valuation lead over Ford (NYSE:F) has also practically disappeared. General Motors has twice Tesla’s sales and is expected to report nearly 6% of revenue as net income this year. The problem is that Tesla is expected to report 15% of revenue as net income, with sales growing at 55% year-over-year (YOY) against 21% for GM.
That said, this deal may remind investors that the Chevy Bolt, a mid-market subcompact, is still around and that most EV sales will be in the mid-market. GM expects to deliver 44,000 Bolts this year. The cheapest Tesla sells for more than $46,000 while the 2023 Chevy Bolt starts at less than $27,000.
Meanwhile, Yum! Brands’ (NYSE:YUM) Pizza Hut leads Domino’s as the nation’s largest pizza chain. Domino’s also faces renewed competition from Papa John’s (NASDAQ:PZZA), privately held Little Caesar’s and thousands of smaller players. DPZ stock is down 30% YTD while YUM stock remains unchanged over the same period. DPZ entered trade today at $368.50 per share and a $13 billion market cap.
For Domino’s, the deal highlights the fact that the company now sells a lot more than pizza — and that it’s fighting inflation. While most rivals use services like DoorDash (NYSE:DASH) and Uber (NYSE:UBER) for deliveries, Domino’s has its own delivery fleet. Domino’s was a huge winner during the worst of the pandemic, but DPZ stock has since lost those gains.
What Happens Next?
Both Domino’s and GM have far to go.
Domino’s, which reported 6.8% YOY growth in its most recent quarter, has to prove that it can beat Yum! Brands and its other competitors in the delivery wars. General Motors must also prove that it can deliver a full line of EVs — and at a profit.
If either or both can prove the skeptics wrong, however, investors will have a lot to celebrate with DPZ and GM stock.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at [email protected], tweet him at @danablankenhorn, or subscribe to his Substack.
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