GM stock has best day since 2020 after automaker tops Wall Street’s third-quarter expectations, raises guidance

DETROIT — Shares of General Motors saw their largest daily increase since March 2020 on Tuesday after the company topped Wall Street’s third-quarter earnings expectations, increased 2024 guidance and reconfirmed plans for shareholder returns and resilient earnings next year.

Shares of the Detroit automaker closed Tuesday at $53.73, up 9.8% — marking the highest daily percentage increase for the stock since volatile trading during the onset of the coronavirus pandemic in March 2020.

Outside of the coronavirus pandemic, the increase was GM’s best day since May 2018, according to FactSet.

GM easily outperformed Wall Street’s third-quarter earnings expectations, leading the Detroit automaker in raising key guidance targets for 2024.

Here’s how the company performed in the third quarter, compared with average estimates compiled by LSEG:

• Earnings per share: $2.96 adjusted vs. $2.43 expected
• Revenue: $48.76 billion vs. $44.59 billion expected

This marks the third time this year that GM has updated its guidance after beating Wall Street’s top- and bottom-line expectations, led by the automaker’s North American operations.

GM is now forecasting full-year adjusted earnings before interest and taxes of between $14 billion and $15 billion, or $10 and $10.50 a share, up from between $13 billion and $15 billion, or $9.50 and $10.50. It also raised its adjusted automotive free cash flow forecast to between $12.5 billion and $13.5 billion, up from $9.5 billion and $11.5 billion.

The automaker tightened its net income attributable to common stockholders, which excludes some dividend payouts, to between $10.4 billion and $11.1 billion, or $9.14 and $9.64 per share. That compared to its previous guidance of $10 billion to $11.4 billion, or $8.93 and $9.93.

GM CFO Paul Jacobson warned earnings will be lower during the fourth quarter, citing timing of truck production, seasonality, lower wholesale volumes and vehicle mix, including selling more electric vehicles.

Jacobson also reassured Wall Street that the company would continue returning cash to shareholders in the form of stock buybacks. The automaker plans to lower its outstanding shares to below 1 billion by early 2025. GM had more than 1.1 billion shares outstanding as of Tuesday close.

The automaker has topped Wall Street’s EPS estimates for nine consecutive quarters and revenue for eight straight quarters.

GM’s third-quarter results were assisted by continued strong pricing, offsetting losses in China and year-over-year cost increases of $200 million in labor and $700 million in warranty costs.

Jacobson said the company’s average transaction price per vehicle, which Wall Street has been monitoring for signs of weakening,  remained over $49,000 from July through September.

“The consumer has held up remarkably well for us,” he said during a media briefing. “Nothing we see has changed from where we’ve been for the last several quarters.”

GM said revenue during the third quarter was up 10.5% from roughly $44 billion a year earlier. Its net income during the quarter rose slightly to $3 billion.

Jacobson noted some of the company’s third-quarter outperformance was assisted by the automaker pulling ahead some truck production from the fourth quarter, which represented a $400 million boost in adjusted earnings.

The company’s North American operations represented a disproportional amount of its earnings. They included adjusted earnings before interest and taxes of nearly $4 billion, up 12.9% from a year earlier. The results represented a 9.7% adjusted profit margin.

The North American results compared with a $137 million loss in China, where GM is attempting to restructure operations, and an 88.2% drop in adjusted earnings in its other international markets compared with a year earlier to $42 million.

GM’s financing arm reported a 7.3% decline in adjusted earnings to $687 million during the third quarter. The automaker’s embattled Cruise autonomous vehicle unit has lost roughly $1.3 billion through September, including a loss of $383 million during the third quarter.

The quarterly report comes just two weeks after a GM investor day in which the company indicated its earnings strength is expected to continue into next year. GM expects to share its full 2025 guidance in January.

Topics of interest for investors that were not addressed earlier this month include GM’s funding plans for its Cruise autonomous vehicle unit, details on its China restructuring, and any updates regarding its near-term electric vehicle sales and plans.

“We think we can turn it around,” Jacobson told CNBC’s Phil LeBeau on Tuesday regarding China. He said the automaker has several meetings scheduled with its Chinese partners regarding the restructuring, including cost cuts.

Shares of GM were up about 36% this year as of Monday’s close of $48.93. The stock has been boosted by billions of dollars in buybacks by GM, which have led to a 19% year-over-year reduction in outstanding shares.

Correction: The automaker tightened its net income attributable to common stockholders, which excludes some dividend payouts, to between $10.4 billion and $11.1 billion, or $9.14 and $9.64 per share. An earlier version misstated a figure.