GM Stock Rises As Investors Look At Bright Side
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General Motors (NYSE: GM) stock surged about 15% to over $66 per share after the release of its third quarter earnings.
The car maker had negative year over year results, but they were better than analysts and investors expected.
- Revenue: $48.49B, down 0.3% from $48.76B. This beat estimates of $45.27B.
- Net income: $1.3B, down 56% from $3.1B.
- Adjusted EBIT: $3.4B, down 18% year-over-year.
- Earnings: $1.35 per share, down 50% year-over-year. This beat estimates of $2.7B.
- Adjusted earnings: $2.80 per share, down 5% year-over-year. This beat estimates of $2.31 per share.
The adjusted EBIT number is an important one for GM, as it excludes one-time or special items, as well as taxes and interest, and focuses on the core operations. This metric’s decent and better than anticipated results were probably the biggest catalyst for the stock.
“In the U.S., we achieved our highest third-quarter market share since 2017 with strong margins, and our restructured China business was profitable once again,” Mary Barra, GM chair and CEO, said.
Tariff impact lowered, guidance raised
GM also raised it adjusted EBIT guidance for the full fiscal year to $12 to $13 billion, up from the previous range of $10 to $12.5 billion. This also likely had a major impact on investor sentiment.
In addition, the adjusted earnings and cash flow numbers were boosted, while GAAP earnings were lowered.
- Net income: $7.7B to $8.3B, down from previous range of $7.7B to $9.5B.
- Earnings: $8.30 to $9.05 per share, down from $8.22 to $9.97 per share.
- Adjusted EBIT: $12 to $13 billion, up from the previous range of $10 to $12.5 billion.
- Adjusted earnings: $9.75 to $10.50 per share, up from $8.25 to $10 per share.
- Automotive operating cash flow: $19.2B to $21.2B, up from $17B to $20.5B.
- Adjusted automotive free cash flow: $10B top $11B, up from $7.5B to $10B.
The outlook was improved due to lower tariff impacts than expected. GM is now anticipated a $3.5 to $4.5 billion tariff hit in fiscal 2025, down from $4 to $5 billion. This is due in part to the MSRP tariff offset that the Commerce Department announced earlier this year, which provides relief for tariffs paid. Also, GM’s own internal tariff mitigation actions reduced the tariff burden by 35%.
Barr also announced that GM is “reassessing” its EV manufacturing footprint, due in part to the end of the EV tax credits.
With the evolving regulatory framework and the end of federal consumer incentives, it is now clear that near-term EV adoption will be lower than planned. That is why we are reassessing our EV capacity and manufacturing footprint, which resulted in a special charge in the third quarter, and we expect future charges,” Barra said. “By acting swiftly and decisively to address overcapacity, we expect to reduce EV losses in 2026 and beyond.”
There wasn’t a lot of immediate analyst reaction to the news and GM still has a median price target of $65 per share, which is down from its current $66 per share.
The stock is dirt cheap, so that probably fueled the rally a bit, sparked by the decent news. I still don’t see a ton of upside here, especially after today’s spike.
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