General Motors raised 2024 guidance early Tuesday after crushing earnings estimates for the third quarter. GM stock flashed a bullish signal as it broke out.
The report marked third GM's third earnings beat-and-raise this year, despite challenging industry conditions that have fueled fears about peak auto pricing and profitability.
The auto giant reported 1.5 million total Q3 global sales, led by trucks and crossovers in the U.S. market.
GM Earnings
Early Tuesday, GM posted adjusted earnings of $2.96 per share, a 30% jump vs. a year ago. Revenue came in at $48.76 billion, up almost 11%. Analysts were expecting Q3 EPS of $2.38 on sales of $44.671 billion, according to FactSet. Sales accelerated from a 7% gain in the prior second quarter, but earnings growth, though robust, slowed sharply vs. Q2's 60% jump.
Results benefited from truck demand and strong pricing in the North American market, a GM earnings presentation showed. That was offset by rising EV sales and warranty costs. Electric vehicles remain money losers for many major automakers for now. Losses in China weighed on Q3 results as well.
The company is now guiding full-year EPS of $10-$10.50, with the midpoint slightly above prior guidance for $9.50-$10.50. Going into the report, analysts had expected 2024 EPS of $9.97, a 30% increase from 2023.
In addition, GM hoisted its target for adjusted automotive free cash flow to $12.5 billion-$13.5 billion, up from $9.5 billion-11.5 billion earlier.
GM Stock Gaps Up On Earnings
Shares of General Motors gapped up 9.8% to 53.73 on the stock market today. GM stock blew past a 49.86 buy point on Tuesday to its highest level since February 2022. The relative strength line hit a new high as the stock broke out, a positive sign. That is marked by a blue dot at the end of the RS line on the weekly MarketSurge chart.
Earlier in October, GM stock bounced off support at the 50-day moving average. During an investor event on Oct. 8, General Motors said that its electric cars will soon cross over to profitability.
Tesla stock fell on Tuesday while Ford rose. Tesla reports Q3 earnings on Wednesday. Ford follows on Oct. 28. Shares of Stellantis and Rivian edged higher.
ICE Challenges, EV Losses In Spotlight
On Tuesday, GM CEO Mary Barra said in a statement that General Motors had raised its retail marketshare to 16.3%, up a half percentage point. It also held its average transaction price near $50,000 — above the industry standard.
Barra said price incentives remained below industry-averages during the third quarter, and that well-managed inventories helped results. Sales in China rose quarter over quarter, but remained under pressure to the tune of a $197 million loss in quarterly equity income from the region.
Earlier in October, Barra had sought to reassure investors that profit margins have not peaked on traditional gas-powered vehicles and that electric-vehicle losses are diminishing. GM's profits in 2025 will be in the same range as 2024, she added.
GM says it remains committed to traditional vehicles with internal combustion engines (ICE) while investing in electric cars, an emerging and future growth market. GM's U.S. EV sales vaulted 60% in the third quarter, thanks to a growing lineup of new and cheaper electric vehicles. However, its total new vehicle sales, dominated by gas-powered pickups and SUVs, fell.
Year to date, GM stock has now surged more than 49% after three earnings beat-and-raise reports.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
