GM's mojo is returning as EV move to positive profit, says analyst
Published: 12:38 28 Jan 2025 EST
General Motors Company (NYSE:GM) earnings on Tuesday delivered a strong finish to 2024 and demonstrated another step in the right direction in the turnaround by management such that the "mojo is returning" for the carmaker, analysts at Wedbush said.
The fourth-quarter results beat Wall Street forecasts at the top and bottom line, while providing 2025 guidance that was "well above" expectations on the top and bottom line as the company sees benefits from its investments and traction on the ground.
"We believe this was another major step in the right direction as management continues to navigate the choppy waters in this EV macro while the turnaround story for GM continues with management successfully balancing production and profitability to generate durable profitable growth over the coming years," said analyst Dan Ives.
"The mojo is returning to the 313 with GM having strong tailwinds into 2025 despite EV tax credit uncertainty."
Total Q4 automotive revenue of $43.60 billion was slightly down on Q3 but up 11% on a year ago, which Ives said showed robust customer demand with its product portfolio.
As the company continues its focus on the bottom line, adjusted profits of $2.51 billion were up 43%, as the gas-powered portfolio continues to drive profitability and cash flow, while the EV business showed its first quarter of positive variable profit.
Looking to the EV space, Ives noted that GM was double its EV market share throughout last year, "pointing to success with GM’s compelling vehicle portfolio as GM expects to release more EV models throughout 2025 to expand its portfolio while looking to balance this growth with growing EV profitability moving forward".
The 2025 guidance, which comes despite a "murky" EV backdrop indicated adjusted profit above Wall Street forecasts as GM looks to ramp the deliveries of its new models while stabilizing the bottom-line through continued EV profitability improvements.
Ives said the company is remaining "prudent" on cost management with continued emphasis on fixed cost discipline and efficiency.
Adjusted automotive free cash flow is expected to be $11.00 billion to $13.00 billion with the goal of seeing profitable China equity income in 2025 and further EV profitability improvements while navigating future challenges tied to lower volume and mix, lowered pricing, and higher labor costs.
Wedbush reiterated its 'buy' recommendation on the shares.
