Tesla’s great U.S. rival, General Motors, had a strong second quarter and boosted its guidance for the rest of 2024. Unfortunately, this positive news went largely unnoticed in the markets, and shares fell more than 6%.
GM easily surpassed Wall Street’s earnings expectations for the second quarter, while it continues to address challenges such as its loss-making autonomous (Cruise) vehicles and its China business.
The better-than-expected performance was evident from an upgrade issued by the company a few weeks ago.
Revenue for the quarter reached a record $47.97 billion, up 7.2% from $44.75 billion a year earlier.
The automaker now expects full-year adjusted earnings before interest and taxes of between $13 billion and $15 billion, up from the previous forecast of $12.5 billion to $14.5 billion.
It also raised its adjusted automotive free cash flow forecast while slightly lowering the range for its net income attributable to stockholders by less than 1%.
Despite the solid performance, GM shares ended Tuesday at $46.38, down 6.4%, marking the stock’s worst daily decline since December 2022.
Analysts feared that this might be the peak for the carmaker.
“Impressive results considering large losses in EVs, Cruise, and China. History suggests the good times won’t last,” Morgan Stanley analyst Adam Jonas said Tuesday in an investor note.
RBC Capital Markets’ Tom Narayan highlighted GM’s expectation that earnings during the second half of the year will be $2.5 billion lower than those in the first half. He also cited GM’s China business as a headwind and noted that Wall Street is losing hope for an additional guidance increase, CNBC reported.
Three profit measures highlighted in the release also did not help the carmaker’s story:
- Quarterly results on a net income attributable to stockholders basis (which excludes some dividend payouts) were $2.93 billion, up from $2.57 billion a year earlier.
- Adjusted earnings before interest and taxes came in at $4.44 billion, up 37.2%.
- Finally, its unadjusted net income was $2.88 billion, up a more modest 14.8% from a year earlier.
