General Motors modestly hiked its 2022 outlook late Tuesday after delivering a far less-than-feared earnings decline for the first quarter. GM stock rebounded slightly from near 52-week lows.
On Tuesday, GM reaffirmed a vehicle volume growth target of 25%-30% in 2022, as chip shortages and other supply disruptions slowly start to ease. The carmaker highlighted robust North American sales and its EV acceleration.
"This is a strong number for GM and the entire auto space as supply chain issues continue to be a major Street worry, with GM front and center," Wedbush analyst Daniel Ives wrote in a note to clients Thursday, referring to the volume target.
He added: "As evidenced last night the EV strategy is progressing well." Ives has an outperform rating on GM stock but he slashed his price target Thursday by 41% to $50, due to "a more challenging growth trajectory ahead in 2022."
Earlier Tuesday, Ford Motor took direct aim at Tesla as it launched the F-150 Lightning, its first all-electric truck and a rival to the upcoming Cybertruck.
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General Motors Earnings
Estimates: Analysts on average expected GM earnings to tumble 26% to $1.65 per share despite revenue rebounding 14% to $36.886 billion, according to FactSet.
GM previously disclosed that its new vehicle sales in the U.S. slumped 20% in Q1. Overall U.S. sales fell 16% last quarter, held back by chip shortages and other supply-chain woes rather than weak demand. Offsetting weak sales, average transaction prices for vehicles have been on the rise.
Results: GM earnings fell 7% year over year to $2.09 per share, easily beating views. Revenue missed, but rose 11% $35.979 billion.
"Improved production and robust customer demand in North America" drove Q1 results, GM said in Tuesday's earnings release. It also cited strong vehicle pricing. But its Q1 profit margin and market share fell year over year, "due to timing of semiconductor impact and availability of dealer inventory."
Outlook: General Motors on Tuesday slightly raised 2022 EPS guidance to $6.50-$7.50, up from $6.25-$7.25 in February. Analysts are now forecasting 2022 EPS of $6.92, down 2% year over year.
"Overall, we see the availability of semiconductors continuing to improve and are working closely with our supply chain partners to help deliver our full year total company wholesale volume goal of 25% to 30% growth," GM CFO Paul Jacobson said on an earnings call late Tuesday. The global chip shortage slashed vehicle production and sales across the industry in recent quarters, including in Q1.
GM Ramps Up On EVs Amid Chip Shortage
Despite a "challenging macro environment," GM management said Tuesday, it continues to accelerate its shift to electric vehicles, or EVs. Cadillac Lyriq EV production will accelerate through the second half of the year and into 2023, it said. GM will open up Lyriq order books on May 19 for reservation holders, with deliveries starting soon after. Chevrolet Silverado EV production will begin in early 2023.
"Launching more EVs faster is the catalyst for growth," CEO Mary Barra said in a letter to shareholders Tuesday. "And we are accelerating our volumes, growing to 1 million units of EV capacity in North America by the end of 2025, and expanding from there. In North America alone, we target production of 400,000 all-electric vehicles over the course of 2022 and 2023."
GM Stock
General Motors stock rose 1.6% to 38.66 Wednesday. Shares fell 4.4% in Tuesday's stock market trading, below a down-trending 50-day moving average and setting at the worst close since late 2020. The relative strength line for GM stock shows serious lag.
GM stock broke out in early January after General Motors unveiled an electric version of its top-selling Chevy Silverado truck. That breakout quickly fizzled.
Ford, which reports late Wednesday, gained 0.5% Wednesday after sliding 3.2% on Tuesday.
Tesla stock rose 0.6% after hitting resistance at its 200-day line. On Tuesday, shares tumbled 12% to 876.42, plunging from the 1,000 level and undercutting key support levels after CEO Elon Musk's Twitter deal.
Russia-Ukraine war May Threaten EV Shift
Both GM and Ford are spending several billions of dollars to shift away from gas and diesel cars to EVs. At the same time, the Russia-Ukraine war is squeezing supplies of parts and metals like wiring harnesses and nickel — the latter a key material for lithium-ion EV batteries.
By 2025, GM expects to roll out 30 all-new EVs globally. While automakers are ramping up EV and battery plans, a shortage of lithium and rare earths poses a serious risk.
Ford Unveils First Electric Truck
Also on Tuesday, Ford began producing Lightning electric pickup trucks. It's the first fully electric version of Ford's and America's bestselling vehicle, the F-150.
"Electrification gives you features you've never seen in a truck before — instant torque, incredible acceleration ... zero to 60 (mph) in four seconds. ... I mean, that is supercar category," Ford CEO Jim Farley said at an unveiling event in Dearborn, Mich., Tuesday.
He also revealed that another unnamed electric pickup truck is in the works. Ford will start shipping the Lightning "in coming days," Farley said.
"We plan to challenge Tesla and all comers to become the top EV maker in the world," he added. "That's something no one would have believed two years ago from us."
The Tesla Cybertruck could begin production in 2023. GM's Silverado EV, a direct rival to the F-150 Lightning, will debut in 2023.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
