Investment banking company Morgan Stanley recently downgraded GM stock from overweight to equal weight, dropping the price target from $75 per share to $55 per share. GM stock value dropped sharply as a result, falling 5.5 percent during early trading Tuesday morning to $48 per share, a whopping 29-percent reduction from a high of $67.21 early last month, opening at its lowest level since September.
The recent Morgan Stanley downgrade follows the release of GM’s 2022 guidance, which is “well below our forecast,” according to Morgan Stanley automotive analyst Adam Jonas.
“We acknowledge the $20 reduction in our GM price target is significant and [is] paired by what we believe is a ‘narrative change’ in our outlook compared to our prior investment thesis,” Jonas wrote in a note to investors.
The price reduction is Morgan Stanley’s “most significant estimate reduction” for GM since the outbreak of the COVID-19 pandemic in 2020.
Among the concerns are the rate at which GM is transitioning to all-electric vehicles. According to Jonas, there’s “rising execution risk on an absolute and relative basis more than we previously believed,” which could result in slower electric vehicle roll out. GM hopes to reach a North American EV capacity of 1 million units by 2025, as well as 1 million units in China around the same time period.
Jonas also suggests that GM should split off its Ultium battery and autonomous vehicle efforts, a move which GM has refused to do. Jonas cites estimates of a slower rate of commercialization for autonomous vehicles as further justification for the downgrade.
GM’s new 2022 forecast includes an operating profit between $13 billion and $15 billion, and a net income between $9.4 billion and $10.8 billion, with earnings between $6.25 and $7.25 per share. Morgan Stanley’s new earnings-per-share forecast is $6.64, down 11 percent from its previous forecast of $7.49 per share.
Subscribe to GM Authority for more GM stock news, GM technology news, GM electric vehicle news, and around-the-clock GM news coverage.
Comments
Exactly as I predicted two years ago. This is the 9,867 time in a row I have been right about predicting gm stock.
Not to worry. $100/share in 2022.
“dropping the price target from $55 per share to $75 per share.”
That’s quite a drop.
Thanks for calling out the typo. Post is updated
Nothing really changed to bump up the price in terms of profitability. And some day soon, stock prices will reflect profitability more than moon shot future numbers. I expect markets to drop significantly, probably next big jolt will be in March after the fed does its first bump. There has been “free” money for so long people forgot what it meant to owe money. The fed is about to remind them again this year.
What else GM should do to convince these idiots.
How can’t they see everything GM is doing?
I would advise Mara Barra and her team to just ignore these idiots.
May be they are just making GM pay for firing their friend. GM’s efforts and progress in the last two or three years are not and cannot be the reason for this, something else for sure.
Hope your investment in GM fails.
That’s the only way to get a clue into you EV cultist.
No chance in hell will they ignore those idiots. GM did a $10 billion stock buyback in a vain attempt to drive the price up. Execs are overwhelmingly compensated with stock options.
Thanks for the Good News. -Jonah J. Jameson.
I find this a little funny as another article from today pretty much directly contradicts it – GM making more EVs than originally planned. Who is correct? I don’t know, but obviously there is a lot of guessing going on…
Well either way it works under the assumption that EV’s will make money. I would rather see a article that says GM to build more PU’s and SUV’s than planned.
Plus come up with a BOF Bronco and Wrangler competitor.
If the Maverick and Santa Cruz sell like it seems like they’re gonna, GM is going to want to get a compact pickup on the U.S. market pronto. Preferably with a hybrid drivetrain to compete with the Mav’s 42mpg.
It seems like they have all they need. All Ford did was chop the ass end off an Escape/Bronco Sport. No reason GM can’t also chop the ass end off an Equinox and call it… I dunno, “New S-10?”
Read the first 2 sentences.”dropping the price target from $55 to $75…” so they raised the price target $20 and it dropped?
Wall street doesn’t ride on promises. And that’s all gm has been doing. 26 EV’s delivered in the 4th quarter. That’s the real number.
“Wall street doesn’t ride on promises”
Unfortunately it does. Look at the valuation of TSLA and explain how that isn’t entirely because of promises.
OMG is anyone surprised. Eventually I think we can say goodbye to gm? Thanks for the chance of pace J Lo!
GM forgets the recipe … build what the public at large wants, you win. Build what “polling data” shows you and you’ll lose your shirt. The public at large wants a reg cab, short box pickup, the Chevy Astro, the Chevy Impala, and the jewel, the 2 doors Chevy Blazer that started it all. Build the above GM and I promise you success. Now GM, continue down the path your’e on with (Yawn) more suvs an 4 door pickups no one wants and you’ll be gone. Just like Chrysler. And one other wish list … the Oldsmobile family like it was in the 1990’s.
Considering the poor sales numbers of everything you’re wanting them to build more of/again, and your belief that customer polling data is worthless, is there a chance you’re confusing “what the market is demanding” with “what I, Brad Barefoot, personally want” ?
Really … decades of positive sales shows what people want. The vehicles I mentioned with the exception of the Impale have one thing in common, the same platform. The reg cab, short box pickup, the Astro, and the two door Chevy Blazer all use the same platform … and did for decades. And creates affordable vehicles. If you less than 35 years old … you don’t know how much you don’t know. GM’s is selling idiotic suvs and idiotic 4 door pickups because they are only offering that … given a choice people would buy the above, especially law enforcement where a 2 door Blazer is concerned. Toyota right now is losing sales hand over fist to Hyundai with the disasterous changes to the Camry. It isn’t just a GM fiasco. And if no one wanted the Astro, Blazer, or reg can short box truck anymore ….. why are the resto-shops so busy restoring them?
> Toyota right now is losing sales hand over fist to Hyundai
No they aren’t. They literally just passed GM in sales to become the top-selling car company in the U.S.
And what are they selling … coupes an sedans … something GM isn’t. Butt ugly as they are they are selling … and Hyundai/Kia is out selling their counterparts where sedans are concerned. Toyota might be the world wide seller right now, but that can change. Humble Mahindra is rumored to be selling their pickup before long, if their current pricing hold they will have one (ugly as it is) for sale in the $24K to $25K nicely equipped.
>And what are they selling … coupes an sedans … something GM isn’t.
Neither Toyota nor Honda’s best-selling vehicles are sedans anymore though.
Toyota’s top-selling vehicle is the RAV4, Honda’s top-selling vehicle is the CR-V. The only sedans left in the top-10 of U.S. sales were the Camry and Civic, the Corolla is down to No.12 and the Accord down to No.16.
> Hyundai/Kia is out selling their counterparts where sedans are concerned.
No they aren’t. Zero Hyundai or Kia models appear in the top-20 sales list.
I got 5 for 5 we know who the realist’s and optimist’s are!
Think Chrysler, who ???????
Time for a management change at GM … it’s time for “Car & Truck” people to be in charge, male or female. The current team is heading for where Chrysler went … down the rabbit hole of failure. Build what the people want GM and your stock will soar, build what you want them to have and you fail … it’s that simple.
What do people want?
That’s easy, more affordable vehicles. The Chevy Astro, The Two Door Chevy Blazer, The two door/reg cab/short box vehicles have one thing in common. All used the same platform, chassis, drive train, etc. That kept cost down. I owns Astros, both the cargo an wagon variants. Bullet proof ! The Blazer was the law enforcement’s first choice in the rural areas and most sportsman’s 1st vehicle of choice. The reg can short box, the parts department’s hero vehicle and customizer’s dream come true. GM’s decision is a simple one. Look at what sold great for literal decades and build on that success …. or continue down the path they are on and fail … same rule applies to Ford an all the others as well. And the Impala very loyal following.
>Look at what sold great for literal decades and build on that success
Single-cab pickups have sold poorly for a decade though. Stripped-down base versions are still picked up by fleets, but they’re DOA on the consumer side of things.
> And the Impala very loyal following.
“Loyal followings” don’t mean anything when it comes down to sales. They sold fewer than 10k of them their last model year, and they sold fewer of them every year since 2012.
You report like a bean counter, and one whose less that 30 years old. The above mentioned vehicles are in demand, and resto-shops stay busy breathing new life back into them. If you’re less than 30 years old you don’t know squat about the car business. You seem to be reporting on what some “ticker magazine” is putting out. Get out and go to the car shows, you’ll hear people talking about wanting to buy cars no longer available, people with money in their pockets, people who keep the resto-shops in business. The big 3 … for every restored vehicle for a daily driver, well that’s a new one they didn’t sell. Now for a math lesson … never thought that I’d buy a Mercedes, but it’s on the table, the Metris (same as the Astro) very nicely equipped is selling from $38K to about $41K VERY nicely equipped, a cargo version for farm use about $29K … so why not buy the Mercedes. If I buy the Mercedes … the Big 3 loses.
>The above mentioned vehicles are in demand
I don’t think they are considering that you can still option a single-cab pickup in the U.S., but the numbers say nobody does. From TTAC:
“For the current model year, regular cab pickups made up only 3 percent of the U.S. mix, down from 6.6 percent in 2016. Extended cabs account for 14 percent of sales in the U.S., down from 18.7 percent in 2019 and 24.4 percent in 2016.
In Canada, extended cabs make up 9.6 percent of the market, meaning that true two-door, backseat-lacking models account for just 1.5 percent of all pickup sales. That’s half that of the United States.”
Can you explain why, if single-cabs are in such demand, people are not buying the single-cabs they currently sell?
I’m not trying to have some kinda ideological fight here, I’m just trying to make the sales numbers make sense with what you’re saying re:market demand.
The tsunami is coming. It will wash over the Detroit manufacturers despite attempts by Washington to prop up union labor in Detroit. BEVs are not going to sell in numbers predicted. The blood bath will end in bankruptcy for several auto companies. A recession, if it happens, will really put the bite on Detroit.
Tesla delivers thousands of EV vehicles daily. The stock value is 20 times gm’s. gm stock doesn’t even give dividends. It’s not a good buy.
Analysts, aka Anal Cysts, partially go on their gut feelings from their closed high rise urban world in New York City. A lot are thirty something yuppies and millenials. This is the first real job in their lives.
However, Adam Jonas has merit in his call. To me it is very plausible. My argument: The auto industry is in a big flavor of the moment fervor for EV’s. It’s navigating into uncharted waters with battery science evolution, electric grid performance unknowns, a national political theater with a most likely change in the next cycle, bench depth and experience of auto executives shallow, autonomous craze, run-a-way inflation, a Roaring twenties era mentality, conspicuous consumption, real estate prices and rents into the stratosphere. The perfect 2007 storm is brewing and on the horizon.
My call is that Morgan Stanley and thirty something Adam Jonas is spot on, even if it hurts. A+ Adam Jonas.
If Mary Barra can successfully pull this off, which I’m hoping for her and the widows and orphans shareholders, she deserves to be paid like Roger Goodell, the commissioner of the NFL who made $69,000,050 million last year. And that was in a pandemic year. God bless America.
When GM gets their collective heads out of their asses and produce world class cars again, we’ll see the stock price go up. Out on the “interstate” one sees Mercedes sedans, Rolls sedans, Korean sedans, Japanese sedans….. but the “STANDARD OF THE WORLD,” which used to be Cadillac slaps out re-badged Chevy Suburbans and Tahoes and thinks they are still “number one.” I’m sad that GM has bean-counted themselves into a second rate outfit.
Bring out a world class gasoline powered large sedan, even if you only sell enough to put the Germans, Japanese, Koreans and Brit’s to shame….. or just languish with electric utility vehicles.
In 2021, 81% of all new vehicles sales in the U.S. were for either trucks, SUVs or CUVs. That proportion has only gotten bigger in the last 12 years.
Honda and Toyota have watched sales for the Accord, Civic, Camry and Corolla decline for the last eight years, to the point that the RAV4 and CRV ae their best-selling models. Same story with the Germans, sedan sales have declined — it’s not a coincidence that the VW group and M-B have put so much more money into the CUV platforms.
I understand there is nostalgia for a time when sedans were the market preference, and they may very well be again at some point, but you can’t look at the data and think putting more sedans on the market is a good idea.
Well put together reply and factual as well from Bill…. BUT there is a point that you don’t give up your product line to whims. Cadillac was never to sell volume, they were to provide coachwork (Fleetwood) and quality, and esteem. You give the public SUVs and mini-vans and out of necessity that is what will be sold. Corvette more than once faced down the bean-counters and fortunately there were enough strong exec’s that we have seen the Corvette continue. The new electric Cadillac SUV looks like every other cookie cutter SUV going down the road today. By the way, same with Chevy….. they are down to one sedan and it might not make it past next week. Bring back the Impala/Caprice…..