General Motors Stock Plunges After Earnings Miss, Buyback Pause
General Motors (GM) shares tumbled nearly 11% on Tuesday and closed down 9% after the automaker's latest earnings report failed to meet analyst expectations. The decline marked GM's worst single-day loss since March 2020.
Despite gaining 50% in 2024, GM's stock shed another 1% on Wednesday. Analysts attribute the sell-off to the lack of a new stock buyback announcement, a key factor in boosting GM's profits in recent years.
Analysts Cite Factors for Stock Decline
BofA auto analyst John Murphy highlighted several reasons for GM's stock underperformance:
* Policy uncertainty related to tariffs, Inflation Reduction Act incentives, and emissions regulations
* Negative product mix in the fourth quarter
* Concerns over price declines exceeding the company's outlook
* Flat volume outlook
* Absence of new buyback authorization
Tariffs Weigh on Auto Sector
Tariffs on imports from Mexico and Canada, where GM has significant operations, pose a significant risk to the company. UBS researchers estimate that the auto industry imports 26% of its goods from Mexico and 12% from Canada.
Despite GM's efforts to mitigate the impact of tariffs, analysts remain concerned about the potential consequences.
GM's Guidance Fails to Impress
GM's full-year 2025 earnings per share guidance of $11 to $12 exceeded consensus estimates but did not account for any impact from additional tariffs. Analysts believe this conservative approach may have disappointed investors.
Conclusion
GM's stock performance is expected to remain volatile in the near term as investors grapple with policy uncertainties and the potential impact of tariffs. While the company has demonstrated its ability to manage costs and execute buybacks, the market is demanding more clarity on future policy and guidance.