GM Stock Slumps on Lack of New Buyback Announcement, Tariff Concerns

Key Points:

* General Motors (GM) stock plummeted up to 11% following its latest earnings report.
* The stock has gained 50% in 2024, driven by cost-cutting and stock repurchases.
* Analysts cite concerns over policy uncertainty, negative product mix, price declines, and lack of a new buyback authorization.
* Tariffs on imports from Mexico and Canada pose a significant risk to the auto sector, including GM.
* GM's CEO believes the Trump administration wants a strong manufacturing sector but has not provided guidance on the impact of potential additional tariffs.

Analysis:

GM's hot stock has encountered a setback after its recent earnings report. Shares plunged due to a lack of a new share buyback announcement and concerns over policy uncertainty, particularly regarding tariffs.

Analyst John Murphy highlights the following factors that have unnerved the market:

* Tariffs on imports from Mexico and Canada, which account for a significant portion of GM's manufacturing and supply chain.
* Negative product mix in the fourth quarter, leading to concerns about EV profitability in 2025.
* Price declines exceeding GM's outlook of -1% to -1.5%.
* Flat volume outlook.

Despite a strong analyst consensus forecast for 2025 EPS, GM's guidance does not account for the potential impact of additional tariffs. This has led to investor caution.

GM's CEO, Mary Barra, has expressed confidence in the company's ability to minimize the impact of tariffs but acknowledges the uncertainty surrounding the Trump administration's trade policies.

Implications:

The decline in GM's stock raises concerns about the auto sector's vulnerability to tariffs and policy changes. Investors should monitor the ongoing trade negotiations and GM's response to these potential headwinds.