Observing GM stock these days seems a little odd. On its own, the ticker’s value of $75.77 as of last Friday’s close doesn’t tell you much. However, after a few minutes of staring at the chart, the previous eighteen months begin to seem like a minor drama. a business that has been written off too frequently. After stealthily rising out of the mid-forties last spring, the stock briefly touched $87 in January before falling back like a runner catching her breath. It’s difficult to ignore how frequently GM appears despite being dismissed.
The Supreme Court was the source of the most recent twist, which no one really anticipated. General Motors recorded about $500 million of the final benefit in its first-quarter results after a 6-3 decision in February declared that some tariffs collected under the International Emergency Economic Powers Act were unlawful. Adjusted earnings were significantly higher than the $2.62 Wall Street had projected, reaching $3.70 per share thanks to that alone. Even after removing the legal windfall completely, the underlying business continued to grow at a rate of roughly 7.5% annually. It was an important detail. On CNBC, CFO Paul Jacobson explicitly stated as much, characterizing the beat as a tale of inventory control and becoming “a little bit ahead of the game on costs.”
JPMorgan was observing. The bank maintained its Overweight rating while raising its price target by one dollar, from $97 to $98. A modest, almost bashful move. Even though they aren’t quite ready to shout it, analysts who covered GM during the long, frustrating stretches of the previous ten years are beginning to sound more confident. Earlier this year, Piper Sandler upgraded the stock to Overweight and increased its target from $66 to $98 in a larger swing. The credit rating of Fitch was raised. Morgan Stanley got off the fence. Slowly, the atmosphere has changed.
Outside the Detroit headquarters, the company is getting ready to move from the Renaissance Center to a new location at the Hudson’s development downtown. This corporate housekeeping move feels symbolic in a way that GM most likely didn’t intend. For many years, the Ren Cen, a glass monument to Detroit’s former aspirations, has towered over the riverfront. Leaving it implies something. Just rent, perhaps. Perhaps more.
Meanwhile, the investment figures continue to come in waves. a $4 billion announcement to support U.S. production of both ICE and EVs. The Toledo powertrain plant received a new $39 million. Flint, Bay City, Rochester, Defiance, and Tonawanda were home to hundreds of millions more. There is a perception that GM is hedging, incorporating flexibility into its factories so it can move away from what executives had previously stated it would buy and toward whatever the market actually purchases. The 2024 400,000-EV goal has been abandoned. Cadillac quietly withdrew its promise to switch to electric vehicles by 2030. In late 2024, Cruise, the robotaxi project, was absorbed and shut down.
A portion of this appears to be a retreat. A portion of it appears to be honest. It appears that investors are concluding that it is the second.
Although the stock isn’t cheap by GM’s historical standards, value investors who don’t typically consider Detroit were drawn to it earlier this year when its forward P/E was in the single digits. A company that believes the worst tariff scares are behind it has implemented a $6 billion buyback program, increased its dividend by 20%, and raised its full-year EBIT-adjusted guidance to between $13.5 billion and $15.5 billion. They could be mistaken. The U.S. saw a 10% decline in Q1 sales, which was attributed to winter storms but likely not solely to the weather. Chinese operations are still undergoing restructuring. The L87 engine recall is costly and complicated.
However, as this develops, it’s possible that GM has established itself in a way that doesn’t require outperforming Tesla or acting as though the EV transition will go according to plan. All it takes is to be the business that continues to sell the most full-size pickups in the United States for the sixth consecutive year. That’s sufficient sometimes.