Investors Frustrated Over Poor GM Stock Performance
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General Motors CEO Mary Barra has begun feeling the pressure from frustrated shareholders over the automaker’s poor performance on Wall Street. Now, major investors are beginning to ask what more Barra and GM can do.
Reuters reported last Friday that GM’s share prices have fallen six percent from the initial public offering price of $33 in 2010 after its bankruptcy reorganization. The increases pressure comes days before GM announces its third-quarter earnings on October 31. GM shares hit a high of $46.48 on October 24, 2017, but have steadily declined 33 percent since then.
Now some major shareholders believe the automaker could see the third major action by activist holders in four years.
“I’ve been expecting it,” said John Levin, chairman of Levin Capital Strategies. “It just seems a tempting morsel to somebody.”
Back in 2015, investor Harry Wilson pushed GM to launch a $5 billion share buyback, and in 2017, GM fought off calls to split its common shares into two classes.
The poor performance comes even as GM has continued to perform well in the market with its truck and SUV business. China has been another strong suit for the automaker in recent years, but a market downturn in North American and a slump in China could push the stock price even lower. Even major news surrounding the automaker’s Cruise Automation self-driving car unit has done little to push the stock price higher.
Some analysts believe it could push GM to spin off its Cruise unit to underscore the company’s value.
To be clear, many investors aren’t frustrated with Barra’s overall performance, but it appears many are left wondering what more GM can do to perform better on Wall Street. Others say it’s time for Barra to get even more aggressive and potentially exit the sedan and passenger car business like rival Ford has.
Since Ford announced it would exit the sedan segment, its shares have fallen below prices during the Great Recession.
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As a current GM owner, I don’t see exciting mainstream product (i.e. not Corvettes) from GM. The Bolt was interesting, but it’s small and not very sharp-looking compared to the Tesla Model 3 which is devouring it’s lunch right now. Sure Tesla profits are in the hole and Musk nearly self-destructed on Twitter, but maybe GM could learn something as far as stock valuation goes??
The past few years of operational and bottom line focus are something, but product drives the top line and investor excitement. Anyone who thinks share buybacks are a good idea to increase sagging stock price should look hard at IBM — EPS improving yet shares going downhill.
I can’t imagine things getting better short-term for GM with more challengers for the cash cows like the Cadillac Escalade from BMW, Lincoln & others.
It’s too bad Bob Lutz had to depart. IMO, that sapped the life out of GM products.
The board is too busy playing with volatility; calls and puts; to give a damn about product. They don’t want the stock to rise, they just don’t want it to stagnate.
I think GM needs to do some bold things to set themselves apart from their competitors. They also need to be consistent, seeing things through instead of scrapping projects and moving on to different things. For one, they need a few exciting, new electric vehicles. Tesla’s Model 3 is cheap (nothing to the interior), strangely proportioned, and tiny, with a small trunk, and yet everyone seems to drool even though they’re only available for $20K more than they were supposed to cost.
I’d like to see GM seriously get into alternative fuel projects, too. What about battery power or hydrogen fuel cells for trains? I think they should also buy ChargePoint and rebrand it as OnStar Charging. Anyone with an active OnStar plan could reserve a station from their infotainment screen, drive up and have the station unlock automatically, and fast charge for free.
The bottom line is the most important, though. GM needs to show investors they’re able to continue making meaningful profits while branching out with new, revolutionary technologies. That means they need to keep making the best quality vehicles they can and communicating how great they are so investors easily recognize their accomplishments and goals.
The glass ceiling needs to be taken off of Chevrolet… Protecting Buick/GMC comes at a pretty steep cost. And I’m not saying to change anything about Buick/GMC, just take the ceiling off Chevrolet and let it be all it can be. The SIlverado is hurt badly by this. So is the Malibu, Cruze, Tahoe and the rest of the line aside from the race cars… (Corvette/Camaro).
Continuous reliability issues and TERRIBLE customer service. You can’t go to one site anywhere without reading TERRIBLE reliability and NO customer service. People are learning slowly that GM sells wholesale vehicles period. Warranty is a mere sales tool that they too have worked around by the ” that is normal operation of your vehicle and there is nothing we can do”. Vehicles with 50,000 miles with engine and transmission failures. And failures of non wear items condensers, fuel lines, Etc. I simply don’t believe 3 years reliability awards. GM does a GREAT job of if you give one negative review you simply don’t ever get another review call, therefore if you only question the happy lucky owners you get a good review. This very item is what drove customers away from Cadillac to the European vehicles. It seems GM is always “LOOK THIS IS WHAT IS COMMING” and it simply never gets here or when it does its already behind and if not behind it is now just as good as others.
I like stock profits like the rest of investors however the younger investor wants to invest in a company they can believe in, one who cares. GM we give to veterans. GM we are investing in green energy. Yet people who have purchased there vehicles with troubles are being let down. GM we payed our CEO a huge bonus. Yet took away one lousy oil change per vehicle. I also understand cutting costs. I hope this trying to sell huge numbers of self driving vehicles to a couple of huge investor people pays off, because our 2014,2015,2017 vehicles have been and continue to be the worst GM vehicles I have owned in 37 years and GM customer service has been TERRIBLE. One persons opinion. Good Luck GM
Design and build class leading exciting vehicles would be a great start in raising sales,profit and stock prices. To spend Billion in redesigning any vehicle and not making it the leader in is class is inexcusable. The competition should not look better, perform better, be better equipped,have better quality and styled interior, better gas mileage or better anything. All GM vehicle should be nothing less than the best in whatever class they compete in. Along with the best vehicles they need to provide the best customer service from the cradle to the grave. This may be wishful thinking on my part but if they adopted this attitude it would be better for everyone. The company Executives,the Employees ,the stock prices and most of all the customers, not to mention the American economy.
There is a lot on the table.
GM is still trying to recover from the past while dealing with development cost that are at record levels. This limits what the can do and how far they can go at one jump.
Then they have to deal with a dying car segments where even Toyira and Honda are seeing declining sales.
They have to deal with pricing in trying to keep cars profitable but yet to where most can afford them.
The market is looking for tech development and GM has invested heavy in tech to where they are trying to show they are a tech company that investors want to invest in.
Taking bold product steps are major gambles as if they fail they can cost you water Billions of dollars that you can not afford to lose.
Just look at Ford. They spent Billions on the Aluminum F series trucks and only ended up with a marginally lighter trucks over GM with much higher material cost cutting into profits.
Then you have to factor all the other BS they are saddled with like too many dealers they can not afford to buy out etc.
The future for GM is clear with tech and how they will use it and sell it to others like Honda. This is the end game and it is being worked on now. This is all the while where they are trimming the dead wood financial waste from the company.
I expect they will do ok as many in the industry struggle, merge or fail.
Every auto mfg is on notice as they all are facing issues.
I don’t disagree, but this doesn’t paint a good picture for shareholders. GM evolving into a tech company doesn’t reduce shareholder risk. Success in new ventures seems particularly hard to come by.
GM was first with an all-electric 200+ mile range subcompact, but it only took a few months for Tesla Model 3 to completely blow them out of the water in sales. Do we mark this as a dying segment and let it slide by?
Are we to believe GM will be the market leader in autonomous? A new sector not only fraught with competitive risk but also regulatory risk? Time to revenue seems very sketchy.
How about peer to peer car sharing? I guess at least someone at GM deserves props for trying hard…
But it’s tough to anticipate a good outcome unless GM can establish and prove product leadership. Having their hands in everything is not enough.
I agree with you. That’s like saying I am a jack of all trades but not the master of any. That don’t instill a lot of confidence in Investors or customers. Prove that you are great at something and then perhaps people will believe in you in whatever other paths you choose to take. The Auto industry business is a risky business. That is why you have to try harder than the other guy.
Mary has spent 5 years as CEO and has overseen value destruction to the tune of more than $22bn in market cap…. yay.
They have taken many time to understand that the current management is awful: A reliability to improve, the Opel’s sale (the worst idea), the wane of overseas operations, Cadillac, not still rescued and the list goes on. Although, I don’t believe that GM has to follow the point of view from the “great” Wall Street “analysts” which will lead the group to its end.
As long as upper mgt gets stock options at artificially-depressed prices, and can then cash them in at current mkt prices, they’ll never feel the pain a retail investor does.
(Not only true of GM – just the way stock awards often work in the US).
I think it time for merry to go GM is are at least was the Hart beat of America and it’s time we show the rest of the auto maker what GM is and will all was will be we have nothing to compete with Jeep are a good off road vehicle look in the past Jeep muders and rock climbing would use Chevy 350 and transmission we need to compete not be laft at if Mary don’t won’t to bild GM thin BY Merry we’re not ready for all electric vehicles are self-driving vehicles A ALL WAYS GM OWNER