General Motors blew past analyst fourth-quarter earnings and revenue targets early Tuesday. Separately, Lithium Americas stock soared after GM agreed to a $650 million investment in the mining operation. GM stock rebounded in early trade.
The GM earnings report arrived after General Motors claimed the No. 1 spot for U.S. auto sales in 2022, with a second-half recovery offsetting a sharp slump in the first six months amid supply disruptions. A statement from CEO Mary Barra said the company was on track to "to produce 400,000 EVs in North America from 2022 through the first half of next year."
Earnings guidance and outlook for 2023 is topped analyst estimates. Even as analysts warn that automakers are swapping supply challenges for demand woes, amid the rise in inflation and interest rates.
GM shares fell more than 4% Monday after Berenberg cut the stock to hold, from buy, and lowered the price target to 41, from 45. The note cited near-term price and inflation challenges, and a dialing down of interest in autonomous vehicles, such as GM's Cruise.
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GM Earnings
Estimates: Analysts polled by FactSet expect GM earnings to rebound 25% to $1.68 per share, reflecting an easy year-ago comparison in part. Revenue is seen recovering 19% to $39.952 billion.
In the year-ago quarter (Q4 2021), GM's quarterly sales hit a multiyear low on weak vehicle inventories caused by semiconductor shortages and supply-chain issues.
Results: Earnings swept 57% higher to $2.12 a share. Revenue gained 28%, to $43.1 billion.
Outlook: GM's earnings release projected full-year net income attributable to stockholders of $8.7 billion-$10.1 billion in 2023. It put EBIT-adjusted earnings at $10.5 billion-$12.5 billion, and EPS-diluted and EPS-diluted-adjusted earnings at $6.00-$7.00. Analysts projected GM earnings of $5.73 per share in 2023, a 20% decline from 2022 estimates.
Separately, General Motors agreed to invest $650 million in Vancouver, British Columbia-based Lithium Americas. The capital will reporterdly go to develop LAC's Thacker Pass lithium mining operation in Nevada. The site aims to produce lithium for up to 1 million electric vehicles (EVs) a year. Shares of Lithium Americas jumped more than 11% higher in premarket trade.
GM Stock
Shares of General Motors shed more than 2% on premarket action on the stock market today. The stock remains under its 50-day and 200-day moving averages. GM is forming a cup base with a 41.68 buy point.
Rival Ford is in a double-bottom base with a 14.77 buy point, but below key technical levels. In both cases, the bases are forming within much larger price declines, the MarketSmith charts show. For shares dipped 2.9% Monday, and notched a 1.9% premarket advance on Tuesday.
Tesla stock has rallied off two-year-plus lows, set in January, after price cuts. TSLA stock also remains well under key levels.
The relative strength line for GM stock is lackluster. A Relative Strength Rating of 31, out of a best-possible 99, means that GM stock has outperformed 31% of all stocks in IBD's database over the past year.
Growing Auto Sales In 2022 Despite Headwinds
In 2022, General Motors managed to grow U.S. vehicle sales 2.3%, with a second-half recovery offsetting a sharp slump in the first six months.
The chip shortage and other supply disruptions hit industrywide vehicle production and inventories for most of 2022, easing in the final quarter. But demand concerns emerged in Q4 and have grown since.
The affordability of new vehicles fell again in December and reached a new low in 2022, according to the Cox Automotive/Moody's Analytics Vehicle Affordability Index.
In December, auto loan rates reached a 20-year high and the average new vehicle price hit a record $49,507, Cox Auto says. The typical monthly payment for a new vehicle increased to an estimated $777, another record.
Further muddying the 2023 auto outlook is a weakening global macro. That is a big challenge for auto giants, who are in the midst of a massive and expensive EV transition.
GM Earnings: EV Sales, EV Shift
General Motors and other traditional automakers are making a big shift away from combustion-engine cars to electric vehicles.
Their EV sales significantly trail those of Tesla for now. Recent Tesla price cuts have possibly ignited a war with GM and Ford.
In 2023, GM has three all-new EV models due from its mass-market Chevrolet brand. Those new models include all-electric versions of the bestselling Silverado truck, and the Blazer and Equinox SUVs.
They could kindle GM's EV growth strategy. But in 2022, production and sales of next-gen GM EVs, using an all-new Ultium-branded EV architecture, were sluggish. The older Bolt EV model fared well.
In the long term, electric vehicles are seen as a growth driver for traditional automakers.
By 2030, GM, Ford and Stellantis expect as much as half of their U.S. sales to be all-electric vehicles, also known as battery-electric vehicles, or BEVs.
