May 18, 2024


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Why General Motors Stock Sputtered Before Earnings

What happened

General Motors (GM 0.23%) reports earnings this afternoon after close of trading — and investors apparently aren’t optimistic. As of 1:15 p.m. ET, shares of the automotive giant are stalling out and down 3.3%.

That’s kind of surprising given that the only real news pre-earnings news is that GM president Mark Reuss just went on CNBC last night to tout the arrival of a new hybrid electric Corvette. So what is it that has GM investors feeling nervous today?  

2023 Chevrolet Corvette Z06.

2023 Chevrolet Corvette Z06. Image source: Chevrolet.

So what

Well, to be fair, all investors seem to have a case of the jitters today, judging from a stock market that has the S&P 500 down 2% already. And like General Motors stock in particular, the S&P has been generally drifting lower over the past five days.

That kind of investor malaise can be contagious and drag down even popular stocks like GM along with it. In the case of GM specifically, though, analysts have warned that the upcoming first-quarter report will be mixed, and not particularly profitable.

Now what

Despite a supply-constrained automotive market that has most if not all new cars selling for manufacturer suggested retail price (MSRP) or above, and has analysts forecasting revenue growth of 13% for GM, Wall Street sees the automaker’s earnings plummeting 25% year over year to just $1.68 per share. If they’re right about that, then this would make Q1 the third straight quarter of declining earnings for the automotive giant — not an attractive trend.  

Then, consider that forecasts are currently calling for a decline in earnings in the second quarter of 2022 as well — which would make it four consecutive “down” quarters. To top off the bad news, bankers are forecasting that the whole of 2022 will be a down year for GM.

Simply put, there’s not a lot of optimism out there about GM right now. Investors may be right to buckle up and expect bad news.