GM Earnings: Stock's Selloff Does Not Look Justified to Us

It is disappointing to see GM’s stock fall by over 4% on July 25 after reporting what we see as good second-quarter results where adjusted automotive free cash flow nearly quadrupled year over year to $5.5 billion. We are not changing our fair value estimate because GM is delivering on what it said it would do while also generating respectable free cash flow. We think the stock may be down on fears of a possible UAW strike this fall and perhaps frustration with the slow rollout of GM’s battery electric vehicles, but GM’s BEV production should accelerate as GMC Hummer production rises this year and GM resolves a problem with an automation equipment supplier at the Ultium Cells joint venture plant in Ohio. GM also said it is no longer discontinuing the Bolt and will instead add Ultium batteries to it—but not until 2024. About 70% of Bolt buyers are new to GM.