General Motors Stock Analysis and 2024 Outlook: Q4 2023 Revenue and Profit Exceed Expectations; What's Next?
11 minutes for reading
The global automotive industry is undergoing significant changes, with more new players eager to compete with eminent giants emerging. However, large companies with a long history, including General Motors Company (NYSE: GM), will not relinquish their market share.
On 5 February 2024, we delved into GM's business and financial position, examined the key factors that have previously influenced and are now affecting its stock value, conducted a technical analysis of the shares, and discovered their prospects for 2024 according to expert forecasts.
About General Motors
Founded by William Durant in 1908, General Motors Company designs and manufactures passenger, commercial, and cargo transport. It is one of the world’s largest automakers and owns popular brands such as GMC, Chevrolet, Cadillac, and Buick.
In 2009, the US company underwent bankruptcy and restructuring procedures. Nowadays, its operations include three main segments:
- Automotive – auto manufacture and sales.
- Cruise – development of autonomous vehicles (AV) and robotaxis. This division provides passenger and cargo transportation services in San Francisco, Phoenix, and Austin.
- GM Financial – auto lending, leasing, insurance, and other financial services for clients and dealers in the US and Canada.
Analysis of General Motors Company’s financial performance
General Motors Company released its Q4 and full-year 2023 report on 30 January 2024.
GM Q4 2023 results compared to the Q4 2022 statistics:
- Revenue: −0.30%, to 42.98 billion USD, forecast – 38.66 billion USD
- Net profit: +5.15%, to 2.10 billion USD
- EPS: +14.39%, to 1.59 USD, forecast – 1.16 USD
- Operating cash flow: −37.39%, to 4.69 billion USD
GM full-year 2023 results compared to the 2022 statistics:
- Revenue: +9.64%, to 171.84 billion USD
- Net profit: +1.94%, to 10.13 billion USD
- EPS: +19.41%, to 7.32 USD
- Operating cash flow: +9.08%, to 20.83 billion USD
General Motors Company revenue forecast for 2024
General Motors Company expects a net profit of 9.8-11.2 billion USD, EPS of 8.50-9.50 USD, and operating cash flow of 18.0-21.0 billion USD in 2024.
GM's guidance for this year reflects hopes of improving financial performance, confidence in its products, and expectations of potential growth in China, alongside a possible increase in demand for electric vehicles, for which CEO Mary Barra predicts a 10% increase in 2024.
General Motors Company’s stock gained 7.8% at the close of the trading session on 30 January, reaching 38.15 USD per unit based on last year’s results and optimistic guidance for this year.
Impact of the strike on General Motors Company stock
The United Auto Workers (UAW) strike lasted from 15 September to 31 October 2023, involving over 45,000 workers at General Motors Company, Ford Motor Company, and Stellantis N.V. factories. This article delved into the reasons behind this strike and discussed who the UAW is.
According to Paul Jacobson, GM's chief financial officer, the strike had a detrimental effect on EBIT for Q4 and the full year 2023, reducing final figures by 0.9 billion USD and 1.1 billion USD, respectively. The stock declined by 19.2% during the strike, plummeting from 33 to 27 USD.
The share repurchase program and its impact on General Motors Company stock
On 29 November 2023, GM launched an accelerated 10 billion USD share repurchase program, seemingly aimed at restoring investor confidence. Before the start of the program, the company had 1.37 billion outstanding shares, which decreased to 1.15 billion as of 1 February 2024. According to Mary Barra, the intention is to reduce the number of common shares outstanding to 1 billion.
On the day of the news release, General Motors Company’s stock rose by 9.38% at the close of trading, reaching 31.60 USD per unit. The quotes climbed to 36.60 USD by the end of 2023.
The Cruise robotaxi incident and the reduction in spending on autonomous driving
As reported by Markets and Markets, the global robotaxi market was valued at 0.4 billion USD in 2023 and is projected to reach 45.7 billion USD by 2030, with a compound annual growth rate of 91.8% from 2023 to 2030.
GM entered the robotaxi market by acquiring Cruise Automation in 2016. However, an accident in 2023 prompted the auto giant to reconsider its plans for this segment. On 2 October, one of Cruise's driverless taxi prototypes collided with a pedestrian in San Fransisco. Following the accident, the company suspended all testing of driverless taxis throughout the US, resulting in the layoff of 24% of the division’s personnel.
In late January 2024, it emerged that Cruise was the subject of two federal investigations relating to this accident. GM stated that it cooperated with the authorities, striving to regain public confidence and improve the safety of its technology.
On 30 January 2024, GM management announced that it was reducing spending on developing and testing driverless taxis by 1 billion USD. Still, it remained committed to its plans to strengthen its position in this market.
General Motors Company’s strengths and weaknesses
Advantages:
- Joint ventures with Chinese automakers provide access to a large and rapidly growing car market
- Well-positioned in the US market: GM led auto sales in 2023
- Several brands and comprehensive model line-ups can meet the needs of various market segments
- Rare product recalls
- The manufacture of both internal combustion engine vehicles and electric vehicles, including hybrid ones
- The universal Ultium platform enables the creation of multiple EV models with different body types, sizes, and technical characteristics
Disadvantages:
- Heavy dependence on the US market
- Heavy reliance on sales of trucks, pickups, and SUVs
2024 General Motors stock analysis
General Motors Company stock has been trading within the 31-42 USD range since 4 April 2022. On 9 October 2023, the quotes broke below its lower boundary, increasing the potential risks of a further decline since this occurred amid the UAW strike. However, after the situation with the factory workers was settled, the stock prices retraced to the trading range.
The subsequent stock buyback and the optimistic 2024 outlook of the company’s management created favourable conditions for price growth, pushing the quotes up to the upper boundary of the range. Its breakout may serve as a catalyst for further upward movement towards the next resistance level of 50 USD.
Technical analysis of General Motors Company*
Expert forecasts for General Motors Company stock in 2024
- According to Barchart, 11 out of 20 analysts rated General Motors Company shares as Strong Buy, two as Moderate Buy, six as Hold, and one as Strong Sell, with an average price target of 48.12 USD
- Based on the information from MarketBeat, one out of 15 experts assigned a Strong Buy rating to the shares, 11 gave a Buy recommendation, two designated a Hold rating, and one rated them as Sell, with an average price target of 50.55 USD
- According to TipRanks, 13 out of 19 specialists designated a Buy rating for the automaker’s stock, 5 rated it as Hold, and one gave a Sell rating, with an average price target of 48.29 USD
- As per Stock Analysis reports, eight out of 17 analysts rated the stock as Strong Buy, five as Buy, two as Hold, one as Sell, and one as Strong Sell, with the average 12-month stock price forecast of 50.33 USD
Conclusion
Share buybacks, a 33% dividend increase, and an optimistic forecast for 2024 may positively impact the value of General Motors Company's shares in the near future. Another positive factor for the American automaker could be lowering the Federal Reserve's benchmark rate: this would make loans more accessible to consumers, potentially creating favourable conditions for an increase in automobile demand.
Among the possible risks for GM are the high level of competition from automakers in China and the slowdown of the US economy. It is worth noting that most revenue comes from the US market.
FAQ
1. What factors influence General Motors' stock price?
Several factors influence General Motors' stock price, including its financial performance, market trends, and external economic conditions. Notably, General Motors' stock volatility can be attributed to industry shifts, technological advancements, and market competition. Recent results, such as an increase in revenue and profits exceeding expectations for Q4 2023, along with an optimistic outlook for 2024, are the key drivers. Additionally, the impact of strikes and the strategic buyback program also affect the stock price.
2. How does General Motors' dividend policy work?
General Motors' dividend approach aims to reward shareholders through consistent payments, reflecting the company's financial health. The General Motors dividend yield and dividend payments schedule are designed to provide investors with a stable income stream. However, specific rates and schedules may adjust based on the company's earnings and board decisions. Historically, GM has aimed to reward shareholders through dividends, subject to board approval and financial performance.
3. What is the historical performance of General Motors stock?
The historical performance of General Motors (GM) stock has shown resilience and adaptation to shifts in the automotive industry, economic fluctuations, and technological advances. Since its 2010 IPO post-bankruptcy, General Motors’ stock growth history has experienced ups and downs, reflecting changes in economic conditions, consumer preferences, and its forward-looking shift towards electric vehicles (EVs) and autonomous driving technology. Notably, despite operational challenges such as the UAW strike, there was an increase in Q4 2023 revenue and profit. While volatility has been part of its journey, GM's stock has shown signs of recovery and growth potential, buoyed by a positive outlook for 2024 and strategic moves such as the stock buyback program.
4. How can I buy General Motors stock?
To invest in General Motors Company stock (GM), you can follow these general steps:
1. Open a trading account: choose a brokerage account that suits your trading needs.
2. Make a deposit: fund your account with the minimum required deposit. For RoboMarkets, the minimum first deposit starts from 100 USD, depending on your account type.
3. Choose the R StocksTrader platform or any other offering stocks and find General Motors stock.
4. Determine the amount of General Motors stock you want to buy based on your budget and investment strategy and execute the trade.
5. Monitor your investment: keep track of your General Motors stock position, analyse performance, and adjust as needed.
For more information, visit the RoboMarkets website here.
5. What are General Motors' latest financial results?
In the General Motors latest earnings report for Q4 2023, the company reported a slight revenue decrease of 0.30% to 42.98 billion USD, exceeding expectations, with net profit rising by 5.15% to 2.10 billion USD. The General Motors financial results summary for 2023 shows significant growth of 9.64% to 171.84 billion USD, with net profit increasing by 1.94% to 10.13 billion USD.
6. How does General Motors' electric vehicle (EV) strategy affect its stock?
The impact of the EV strategy on General Motors stock is profound, as the company's commitment to electric vehicles positions it as a leader in the evolving automotive market. General Motors' EV strategy, including a forecasted 10% sales increase in electric vehicles for 2024, positively impacts its stock by positioning GM as a leader in the sustainable automotive transition. This forward-thinking approach is critical for the General Motors EV market stock analysis, as it aligns with global sustainability trends and consumer demand for greener transportation options.
7. What are analysts saying about General Motors stock?
Analysts are optimistic about General Motors, with most recommendations assigning a Strong Buy or Buy rating and forecasting a target price range suggesting potential growth. These optimistic General Motors stock forecasts and ratings are supported by GM's financial results, strategic initiatives, and the company's adaptability to industry changes.
8. How does the automotive industry's outlook affect General Motors' stock?
The automotive industry trends and General Motors stock are closely linked, with the industry outlook impacting GM's performance. The General Motors stock industry outlook impact is influenced by factors such as the shift towards electric vehicles, technological advancements, and market competition, all of which GM strategically navigates.
9. What are the risks of investing in General Motors stock?
The General Motors stock investment risks analysis involves considering the risks of market volatility, economic downturns, and industry-specific challenges like competition and technological disruptions. Recent events like the UAW strike and adjustments in autonomous vehicle development highlight such risks alongside the broader economic and competitive landscape.
10. How do General Motors' sustainability and ESG efforts impact its stock?
General Motors' sustainability efforts and stock performance are interconnected, with the company's ESG initiatives positively influencing its market value. The General Motors ESG initiatives stock impact is seen in investor interest and market perception, as GM's commitment to environmental sustainability and social responsibility aligns with growing consumer and investor expectations.
* – Past performance is not a reliable indicator of future results or future performance.
The material presented and the information contained herein is for information purposes only and in no way should be considered as the provision of investment advice for the purposes of Investment Firms Law 87(I)/2017 of the Republic of Cyprus or any other form of personal advice or recommendation, which relates to certain types of transactions with certain types of financial instruments.
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