Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

Aptiv to sell stake in self-driving venture to Hyundai, cuts FY sales view

Published 05/02/2024, 08:51 AM
Updated 05/02/2024, 11:10 AM
© Reuters
APTV
-
005380
-
UBER
-
LYFT
-

By Nathan Gomes

(Reuters) -Auto parts supplier Aptiv (NYSE:APTV) on Thursday cut its annual sales forecast and said it would reduce equity interest in its self-driving joint venture, Motional, with Hyundai Motor (OTC:HYMTF).

Shares of Aptiv jumped about 11.6% in morning trading.

Hyundai will acquire 11% of Motional's common equity held by Aptiv for $448 million, expected to be completed by the third quarter, the latter said on a post-earnings call.

Aptiv's move comes as legacy automakers cut down or back away from their push towards autonomous technology, following technological hurdles and growing safety concerns over self-driving vehicles.

CFRA analyst Garrett Nelson said the announcement was a "big positive" and that Motional had been a drag on Aptiv's bottom line for a long time.

As part of the agreement, Hyundai will fund Motional with an additional $475 million, which is expected to occur in the second quarter. Aptiv will not be required to fund the joint venture in the future.

The transactions are expected to reduce Aptiv's common equity interest from 50% as of March 31, 2024 to about 15%.

Motional uses Hyundai's IONIQ5 electric car for its robotaxi service, which it offers in Las Vegas through Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT).

The auto parts supplier also raised its share repurchase target for the year to $1.5 billion from $750 million.

The company cut its full-year 2024 net sales forecast to be between $20.85 billion and $21.45 billion, compared with its prior projection of $21.3 billion to $21.9 billion.

"We will continue to benefit from both our portfolio of leading technologies and our relentless focus on cost optimization to drive outperformance through the back half of the year," said Aptiv CEO Kevin Clark.

Aptiv flagged a slowdown in electrification in North America and Europe, along with persistent labor and material cost headwinds impacting operations.

But demand for Aptiv's modern safety equipment helped soften the impact, powering a first-quarter profit beat.

On an adjusted basis, it earned $1.16 per share in the quarter, compared with LSEG estimates of $1.01 per share.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.