What Happened?
Shares of automotive manufacturer General Motors (NYSE:GM) fell 11.1% in the afternoon session after the company reported fourth-quarter earnings and provided guidance that assumes a stable policy environment in the US, thus failing to help investors shrug off concerns about potential regulatory challenges. A key concern is the Trump administration's potential plans to reduce incentives like tax credits, which have helped accelerate the demand for EVs. If these plans are implemented, both GM and other EV players may need to rethink their growth forecasts.
A Berstein analyst added following the earnings release "In our view, the guidance for 2025 leaves no room for errors, and also does not include impact from regulatory changes in the U.S., especially on tariffs and BEV support." On a more positive note, General Motors beat analysts' revenue expectations this quarter, and its full-year EPS guidance came in higher than Wall Street's estimates. Overall, this was a mixed quarter, which failed to clear up uncertainties.
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What The Market Is Telling Us
General Motors’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for General Motors and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 5.8% after shares of automobile manufacturers surged as the new Trump administration pledged its support for the industry. In a recent speech, President Trump stated, "Today, we will end the Green New Deal, and we will revoke the electric vehicle mandate, saving our auto industry and keeping my sacred pledge to our great American auto workers."
Separately, Deutsche Bank upgraded the stock's rating from Neutral to Buy and raised the price target from $56 to $60. The firm added "Heading into earnings season, we upgrade GM from Hold to Buy given its recent strategic moves (China, Cruise), consistent track record of execution, and aggressive share buyback trajectory."
General Motors is down 2.7% since the beginning of the year, and at $50.01 per share, it is trading 16.9% below its 52-week high of $60.20 from November 2024. Investors who bought $1,000 worth of General Motors’s shares 5 years ago would now be looking at an investment worth $1,486.
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