General Motors Revs Engine For Electric Prospects
General Motors is everyone’s favorite embattled automaker. While the American car manufacturers stock prices have been stagnant for close to a decade, 2020 looks like it could light a spark in GM’s engine once again.
This may come even despite the pandemic, which ravaged GM’s stock price early in the year and has left it sputtering to catch up even to pre-pandemic highs ever since. August was a decent month, with an overall steady increase smoothing over the minor dips.
In the last five days, however, GM has seen a marked increase in their stock prices. While pre-pandemic highs haven’t yet been realized, Wall Street has been preparing for a while to see something new from the automaker.
Electrifying the Future
For the past few months, GM has coasted off their success in China with the $4,000 electric Wuling Hongguang mini EV. While this small vehicle has had success overseas, GM has spent 2020 negotiating a couple of lucrative, potentially game-changing contracts. Now, the time has come for the terms of those contracts to be realized.
Way back in April, GM agreed to develop two electric vehicles for Honda. GM would provide the battery, while Honda provided the case (or car).
More recently, GM and Nikola announced a new partnership on similar terms: GM will build several versions of Nikola’s Badger using GM’s Ultium fuel cell technology. In return, GM will see their pot swell by $2 billion of Nikola’s stock.
With GM looking to forge new roads – or at least the vehicles to drive the old ones – to finish out the last several months of 2020, the potential for gains is great. However, the success of the vehicles themselves will dictate how the market responds to GM’s stock in the future.
But Should You Invest?
For now, we here at Qai rely on our deep-learning AI (artificial intelligence) to guide our investment decisions. While it can’t predict future actions of corporations, it can provide a clearer picture of a stock’s investment potential.
Without further ado, let’s take a look at what the numbers have to say.
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General Motors Co (GM)
GM closed up almost 8% on Tuesday, bringing the day’s end to $32.38 on volume approaching 51.7 million shares. This compares rather well to the 22-day price average of $29.30, though the stock is still down over 13% for the year.
The company’s other financial metrics are a rather mixed bag, pandemic or not. For instance, EPS has shrunk by 140% over the last three fiscal years, although ROE has grown from 0.82% to 15% in the same time frame.
Revenue has also seen a marked decrease from just under $146 billion to just over $137 billion, while operating income has shrunk from $10 billion to $6.4 billion. Currently, the company is trading with a forward 12-month PE of 7.01 on the back of such abysmal financial performance.
And yet, there is light at the end of the tunnel: with nowhere to go but up, and major plans for a reinvention of the company’s car models in the works, forward 12-month revenue is expected to increase by over 12.7% over the next year.
So, What’s the Verdict?
General Motors is a company with a lot of promise – but that promise has yet to be realized. Our AI agrees that now may not be the time to buy, as it tossed GM ratings spanning the board. The company earned an A in Technical, C in Momentum Volatility, D in Growth, and F in Quality Value, for a final investment recommendation of Neutral. For now, trading your GM stock is done at your own risk.
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