General Motors Share Price Today Drops 6% Despite Second-Quarter

General Motors Share Price Today Drops 6% Despite Second-Quarter Beat Amid Wall Street Fears ‘Good Times Won’t Last’ – gm stock price today analysis

Key Points :

• After handily surpassing Wall Street’s expectations for second-quarter earnings, General Motors has raised a number of significant financial targets for 2024.
• Even with the strong financial results, investors reacted negatively to GM’s pullbacks in growth businesses, sending shares of the automaker plunging 6.4% on Tuesday.

Live Update of the general motors share price today  :

gm stock price today After easily exceeding Wall Street’s expectations for second-quarter earnings, General Motors is increasing a number of significant financial targets for 2024 as it restructures financially losing businesses like its China business and autonomous vehicles.

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The Detroit automaker raised its gm stock price today  previous guidance from $12.5 billion to $14.5 billion, or $9 and $10, to between $13 billion and $15 billion, or $9.50 and $10.50, for full-year adjusted earnings before interest and taxes. In addition, it increased its forecast for adjusted automotive free cash flow while reducing its net income attributable to stockholders range by less than 1%.

Even with the strong financial results, the stock had its worst daily decline since December 2022 as it closed Tuesday at $46.38, down 6.4%.

Wall Street analysts claim that investors reacted negatively to growth business pullbacks, waning upside during the second half of the year, and fears that the automaker’s earnings power has peaked.

“Amazing outcomes given the significant losses in EVs, China, and Cruise.” In a note to investors on Tuesday, Morgan Stanley analyst Adam Jonas stated, “History suggests the good times won’t last.”

Tom Narayan of RBC Capital Markets mentioned that GM has predicted that second-half earnings will be $2.5 billion less than first-half earnings. In addition, he mentioned GM’s operations in China as a challenge and claimed that Wall Street is giving up on further guidance increases.

“After years of unheard-of inflation, many investors have been waiting for the price normalisation narrative to play out. They probably view the GM commentary as a crucial piece of evidence that suggests we may be entering a deflationary cycle,” Narayan said.

The following represents the gm stock price today performance in the second quarter in comparison to LSEG’s average estimates:

general motors share price today Adjusted earnings per share were $3.06 compared to $2.75 expected.
Revenue: $47.97 billion versus the anticipated $45.46 billion
Net income attributable to stockholders, which does not include some dividend payouts, was $2.93 billion in GM’s second-quarter results, up 14.3% from $2.57 billion in the same period last year. GM reported earnings of $2.55 per share, up from $1.83 in the previous year. A 37.2% increase to $4.44 billion was realised in adjusted earnings before interest and taxes, or $3.06 per share.

With its unadjusted net income of $2.88 billion, it outperformed the previous year by 14.8%. According to General Motors, its second-quarter revenue set a new record for the automaker, increasing 7.2% from $44.75 billion a year earlier.

During a press briefing, GM CFO Paul Jacobson stated, “It was truly a great first half and second quarter, and we’re positioned to have a very strong year.” “We anticipate some pricing headwinds that we’ve assumed in the second half of the year, along with some seasonally higher commodity costs.”

In addition to reporting strong earnings, General Motors (GM) announced on Tuesday that it is suspending production of its Cruise Origin autonomous car indefinitely. This will result in a special charge of about $600 million in the second quarter. In addition, it disclosed that it is working with SAIC to restructure a joint venture in China despite ongoing losses, which included a $104 million decline in equity income in the second quarter.

According to Jacobson, GM will keep paying back investors despite its robust profits and adjustments to its plans for autonomous and electric vehicles that are cutting or postponing costs.

According to Jacobson, higher expenses in the second half of the year will include a $400 million planned marketing expenditure for new launches, which is an increase from the first half of the year. He stated that the expenditure is still lower than it was a year ago at this time.

Growing EV sales will also be challenging because, according to Jacobson, they won’t be expected to boost profits as much as GM’s gas-powered models will.

North America leads

general motors share price today second-quarter beat and guidance hike were mostly caused by GM’s truck-driven North American operations, as they have been in recent years. In particular, according to Jacobson, the car prices have held up better than GM had predicted at the start of the year.

According to GM, its second-quarter average transaction price was approximately $50,000, with incentives that were less than the average for the US industry.

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The North America segment saw a nearly 40% increase in adjusted earnings from a year ago during the quarter, reaching $4.43 billion. With a 10.9% profit margin, the division reported a gain of 2.3 percentage points from the previous year.

Despite outperforming in a number of areas, GM failed to return to profitability in China, where the automaker has seen sharp drops in earnings.

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