General Motors Stock Slumps After Earnings, Market Remains Uncertain

Shares of General Motors (GM) experienced a significant decline after the company released its latest earnings report on Tuesday. The decline, which reached as much as 11% during trading, marked the stock's worst performance since March 2020.

Despite GM's efforts to reduce costs and repurchase shares, analysts cite a lack of a new share buyback announcement as a major factor in the negative investor reaction. BofA auto analyst John Murphy notes that "lack of new share buyback announcement loomed large" in the stock's drop.

GM's repurchase program has played a significant role in boosting its profits by reducing shares outstanding and supporting a higher stock price. While Murphy believes the market's reaction was excessive, he identifies several factors that could keep GM's stock in a penalty box.

These factors include policy uncertainty, particularly around tariffs and incentives, a negative sales mix in the fourth quarter, concerns about price declines in the future, a perceived lack of growth in vehicle volume, and the absence of a new buyback authorization.

The auto sector faces uncertainty due to potential tariffs, with GM relying heavily on imports from Mexico and Canada for its production. GM's chair and CEO, Mary Barra, has expressed confidence in the company's ability to mitigate the impact but acknowledges that investors are anxious about the potential effects.

GM's full-year 2025 EPS guidance of $11 to $12 exceeded consensus forecasts but does not account for any potential impact of tariffs. Barra emphasizes the need for "stable" policy environment but acknowledges that the actions of the Trump administration have created uncertainty among investors.

The market remains cautious toward GM's stock with several factors contributing to the decline. Tariffs, policy uncertainty, and a lack of new buyback announcements are among the concerns raised by analysts. While GM maintains a positive outlook, investors are seeking clarity and reassurance amid the current market conditions.