General Motors Co. is slated to report quarterly earnings before the bell on Tuesday, on the heels of a difficult quarter for Tesla Inc. and amid heated EV price wars.
GM
GM,
said in late January that it would not follow Tesla
TSLA,
and Ford Motor Co.
F,
in cutting electric-vehicle prices to spur demand.
Since then, however, Tesla has slashed its EV prices further, which cut down its margins and dented first-quarter earnings, and Ford has said it expects an EBIT (earnings before interest and taxes) loss of $3 billion for its EV unit, following a loss of $2.1 billion last year.
Following that Ford disclosure and Tesla’s “disappointing” first-quarter gross margins, “investors are trying to get a better handle on the magnitude of GM’s expected earnings decline this year,” CFRA analyst Garrett Nelson said.
The FactSet consensus calls for adjusted earnings of $6.01 a share for GM this year, which would compare with adjusted earnings per share of $7.59 for 2022.
Besides any potential price cuts, the expected production ramp-up of new EV models using GM’s Ultium battery and EV architecture is also high on the list of topics investors expect to hear about from the car maker on Tuesday, Nelson said.
Here’s what to expect:
Earnings: Analysts polled by FactSet expect GM to report adjusted earnings of $1.70 a share in the first quarter, compared with adjusted earnings of $2.09 a share in the first quarter of 2022.
Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is matching that expectation of $1.70 a share.
Revenue: The analysts surveyed by FactSet are calling for sales of $38.5 billion for GM, compared with $36 billion in the first quarter of 2022. Estimize is expecting GM revenue to be a tad higher, to $38.6 billion.
Stock price: GM shares have lost about 20% in the past year, compared with losses of around 7% for the S&P 500
SPX,
The underperformance holds in shorter time frames as well: GM is down 0.5% so far this year, contrasting with gains of around 8% for the broader index.
What else to expect: The U.S. Environmental Protection Agency earlier this week released an updated list of the all-electric and hybrid vehicles that qualify for a full or partial tax credit, and GM’s Chevy Bolt remained one of the cheaper options.
Two years ago, GM set a goal to sell only EVs by 2035. Since then, it has launched or announced plans to launch several new EVs, mostly the types of vehicles U.S. buyers have favored for years: SUVs and trucks.
Emmanuel Rosner at Deutsche Bank is betting on an earnings beat for both GM and Ford, which is slated to report first-quarter earnings after the bell on Tuesday, May 2.
That’s based on “strong pricing and improvement in supply-chain conditions,” the analyst said in a note Thursday.
A beat for GM is more widely anticipated on Wall Street, which could lead to a more muted stock response after the earnings come out, Rosner said.
GM in March announced a buyout program for salaried employees, saying it expected charges of about $1.5 billion as it sought to be “nimble in an increasingly competitive market.”
Earlier this month, the company announced that about 5,000 employees had taken the buyout, but there could be additional comments about the impact of the buyouts on GM’s balance sheet during the earnings call following the results.
