S&P 500   4,967.23
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S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
How major US stock indexes fared Friday, 4/19/2024
Stock market today: Tumbling tech stocks drag Wall Street to the finish line of another losing week
American Express profits jump 34%, helped by jump in new customers, higher spending
American Express, Fifth Third rise; Netflix, PPG Industries fall, Friday, 4/19/2024
Intuitive Surgical Stock Can Trend Much Higher This Year 
3 Magnificent Seven Stocks Outperforming the Rest
Bargain Hunting: 3 Stocks With RSIs That Scream Oversold
S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
How major US stock indexes fared Friday, 4/19/2024
Stock market today: Tumbling tech stocks drag Wall Street to the finish line of another losing week
American Express profits jump 34%, helped by jump in new customers, higher spending
American Express, Fifth Third rise; Netflix, PPG Industries fall, Friday, 4/19/2024
Intuitive Surgical Stock Can Trend Much Higher This Year 
3 Magnificent Seven Stocks Outperforming the Rest
Bargain Hunting: 3 Stocks With RSIs That Scream Oversold
S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
How major US stock indexes fared Friday, 4/19/2024
Stock market today: Tumbling tech stocks drag Wall Street to the finish line of another losing week
American Express profits jump 34%, helped by jump in new customers, higher spending
American Express, Fifth Third rise; Netflix, PPG Industries fall, Friday, 4/19/2024
Intuitive Surgical Stock Can Trend Much Higher This Year 
3 Magnificent Seven Stocks Outperforming the Rest
Bargain Hunting: 3 Stocks With RSIs That Scream Oversold

Goodyear Tires can benefit from EVs, but not how you may think

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close-up image of tires with yellow goodyear logo

Key Points

  • Goodyear is the nation's largest replacement tire company, benefitting from the electric vehicle (EV) tire tailwind.
  • EVs tend to wear out tires 5X faster than gas-powered cars, usually requiring replacements from 10,000 to 30,000 miles compared to 55,000 to 75,000 miles for gas-engine vehicles.
  • Goodyear has a new CEO from Stellantis and is considering selling or spinning off three non-core assets, including its chemical, Dunlop, and off-the-road segments.
  • 5 stocks we like better than Goodyear Tire & Rubber

The Goodyear Tire and Rubber Company NASDAQ: GT shareholders have breathed a sigh of relief with the events of the past few months, which include a new CEO who has the backing of activist shareholder firm Elliott Management. The sentiment is more bullish this time around with the normalization of rubber prices. However, the Autos/Tires/Trucks sector company is facing additional tailwinds that electric vehicle (EV) owners are complaining about.

EV replacement tire tailwind

Investors may get another surprise with Goodyear's earnings due out on February 8, 2024, due to a growing tailwind accompanying every new EV sale. While the demand for electric vehicles (EVs) may be waning, the need for replacement tires is surging. Due to the instant torque, acceleration and weight, EVs tend to wear out tires up to 5X faster than internal combustion engine (ICE) vehicles.

This could mean a strong surge in business for Goodyear, which has surpassed Compagnie Générale des Établissements Michelin SCA (OTCMKTSL MGDDY) as the largest replacement tire company in the United States, especially when a new set of EV replacement tires can run $900 to $1,400. Check out the sector heatmap on MarketBeat.

EVs burn rubber 5X faster.

It turns out the most costly expense when it comes to EVs is replacing the tires. Traditional ICE vehicles tend to wear out tires around 55,000 to 70,000 miles. Depending on the models, EVs tend to wear out tires between 7,000 to 10,000 miles. Tesla Inc. NASDAQ: TSLA Model 3 owners have regularly complained about having to replace tires around the 7,000 to 10,000-mile mark due to the massive acceleration and heavy weight of its batteries.


Model S Plaid burning rubber even faster

Telsa Model S Plaid owners have complained about having to replace tires every 5,000 miles. The vehicle's heavy weight can cause uneven wear on the inner edges. The intentionally negative camber due to the suspension set-up is "exacerbated" with 21-inch wheels. This is meant to provide a better grip of the road on turns during high speeds. Unfortunately, this leads to even faster degradation of tires.

Goodyear EV tires

Goodyear is actively developing its ElectricDrive EV tires specifically designed to address the unique degradation that EVs cause to tires. While it has been selling its ElectricDrive EV tires, the ElectricDrive 2 EV tires have a 60,000-mile warranty and are expected to start selling in May 2024.   

Hertz dumping 20,000 EVs

Hertz Global Inc. NYSE: HTZ has stated it would be selling off a third of its EV fleet, or 20.000 of its Tesla EVs, despite the accelerated business from leasing to Uber Technologies Inc. NYSE: UBER drivers. EV repairs cost 20% more than ICE vehicles, and resale values drop significantly quicker than anticipated, as evidenced by the $245 million depreciation charge that will be reported on its Q4 2023 financial results. The company will use some of the proceeds to purchase more ICE vehicles. Get AI-powered insights on MarketBeat.

The Goodyear Forward turnaround plan

In November 2023, Goodyear collaborated with Elliott Management to develop the Goodyear Forward optimization plan to bolster margins, reduce debt and optimize its portfolio. Some of its actions include selling non-core assets, including Dunlop (Europe), off-the-road (Asia), and its chemicals business in the United States, which is comprised of three chemical plants.

Sell or spin off non-core assets

These three non-core assets generate $2 billion in annual revenues, which the company hopes to recoup in a sale or spin-off. Margins are targeted with $1 billion in cost savings, resulting in segment margins that will grow to 10% by 2025. Leverage is expected to decline to 2X to 2.5X with improved earnings and debt servicing from the sale of assets.

The longtime CEO of Goodyear, Rich Kramer, is also set to step down and is being replaced by Mark Stewart, a former executive at Stellantis N.V. NYSE: STLA. Goodyear earnings are expected after the close on February 8, 2024. Consensus EPS estimates are for 36 cents and revenues of $5.376 billion.

Goodyear analyst ratings and price targets are at MarketBeat. Goodyear peers and competitor stocks can be found with the MarketBeat stock screener.

goodyear stock daily ascending triangle

Daily ascending triangle

The daily candlestick chart on GT illustrates an ascending triangle pattern. The ascending lower trendline started upon bouncing off its $11.35 low on November 1, 2023. The flat-top upper trendline resistance sits at $14.85 after multiple attempts for a breakout failed. The daily market structure low (MSL) buy triggered the breakout through $13.42 on January 17, 2024. Shares again peaked at rejected off the upper trendline to fall back under the daily 50-period moving average (MA) support at $14.10, retesting the ascending trendline. The daily relative strength index (RSI) is stalled flat at the 50-band.

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Should you invest $1,000 in Goodyear Tire & Rubber right now?

Before you consider Goodyear Tire & Rubber, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Goodyear Tire & Rubber wasn't on the list.

While Goodyear Tire & Rubber currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Goodyear Tire & Rubber (GT)
2.8097 of 5 stars
$11.88+1.5%N/A-4.93Moderate Buy$17.16
Tesla (TSLA)
4.8468 of 5 stars
$147.05-1.9%N/A34.12Hold$194.70
Stellantis (PUGOY)
0 of 5 stars
$27.28+0.7%N/A7.16N/A
Stellantis (STLAP)
0 of 5 stars
24.23-0.4%N/AN/AN/A
Stellantis (STLA)
3.3202 of 5 stars
$25.77+0.1%N/AN/AHold$30.28
Uber Technologies (UBER)
4.8017 of 5 stars
$69.22-2.9%N/A80.49Moderate Buy$78.21
Compagnie Générale des Établissements Michelin Société en commandite par actions (MGDDY)
0.4738 of 5 stars
$18.63+0.5%2.79%N/AReduceN/A
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Jea Yu

About Jea Yu

  • JeaYu21@gmail.com

Contributing Author

Trading Strategies

Experience

Jea Yu has been a contributing writer for MarketBeat since 2018.

Areas of Expertise

Equities, options, ETFs and futures; fundamental, qualitative, quantitative and technical analysis and pattern identification; active and swing trading; trading systems and methodology development

Education

Bachelor of Arts, University of Maryland, College Park

Past Experience

U.S. equity markets trader, writer and analyst for over 25 years. Published four books by publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. Speaker at various expos and seminars and has been quoted and featured in USA Today, The Wall Street Journal, Traders Magazine, The Financial Times and various trade publications, including Stocks & Commodities, Active Trader and Online Investor.


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