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General Motors Co GM

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GM Posts Outstanding Third Quarter, but These Results Won't be Typical Going Forward

Analyst Note

| David Whiston, CFA, CPA, CFE |

Cost-cutting measures induced by the pandemic enabled GM to post an outstanding third quarter. We are raising our fair value estimate to $52 from $50 on improved 2020-21 performance than previously modeled and due to 2020 U.S. industry light vehicle sales having a chance at 14.5 million, compared with the low 13 million range in our model. We also halved the value from a possible Nikola deal (see our Sept. 8 note). CEO Mary Barra said on the earnings call that talks continue, but given Nikola’s stock price decline since the deal’s announcement, the $4 billion of value GM originally targeted over six years is not likely, in our view. Other developments announced are that GM has a tentative deal with the Unifor union in Canada that will mean GM investing about CAD 1 billion to bring back full-size pickup production to Oshawa, Ontario. Barra also said provided GM’s current recovery pace continues, the firm expects to resume a dividend in mid-2021.

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Company Profile

Business Description

General Motors Co. emerged from the bankruptcy of General Motors Corp. (old GM) in July 2009. GM has seven brands and operates under four segments: GM North America, GM International, Cruise, and GM Financial. The United States now has four brands instead of eight under old GM. The company remains the market leader in the U.S. with 17% share in 2019. GM Financial became the company's captive finance arm in October 2010 via the purchase of AmeriCredit.

300 Renaissance Center
Detroit, MI, 48265-3000
T +1 313 667-1500
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2019
Stock Type Cyclical
Employees 164,000