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GM earnings: Why one analyst is 'skeptical' of EV profit claims

On Tuesday morning, General Motors (GM) reported its fourth-quarter pretax profit fell by 54% to $1.8 billion. In a letter to shareholders, CEO Mary Barra affirmed the company's position for their future by writing, "In our EV business, we expect our US portfolio will become variable profit positive in the second half of the year based on our current expectations for EV demand and production growth, strong interest in our vehicles, lower commodity prices and other factors." In an exclusive interview with Yahoo Finance Executive Editor Brian Sozzi, Barra reaffirmed that sentiment and discussed GM's performance, focus, and goals for the future. Garrett Nelson, CFRA Research VP & Equity Analyst, joins the Live show to give his insights to GM's proposed goals for the future. When asked about EV goals and outlook on profit margins, Nelson states: "There are no question the margins are strong from the gas-powered vehicles. The internal combustion engine business is strong. But it's just that they're gonna have to pivot in term of their capex and operational plans. They've indicated that they're in the process of making that pivot. They took a very shareholder-friendly action in terms of announcing a $10 billion stock buyback in November and as a result the 2024 EPS guidance, the growth that they're forecasting, is almost entirely a reflection of a reduced share count driving that EPS growth... It's really a question of how they navigate this transition to EVs and it's going to be gradual probably over the next 10 to 15 years, whereas before they were planning on making a more aggressive shift to EVs. The problem is that the EV market is oversaturated right now." For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.Editor's note: This article was written by Nicholas Jacobino


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