Cruise, cash and EVs top of mind for Wall Street

DETROIT — A lot has changed since General Motors’ last investor day two years ago, but one thing that hasn’t is the automaker’s ability to outperform Wall Street’s expectations — doing so every quarter since then.

GM CEO Mary Barra will attempt to convince investors during a capital markets day Tuesday that she and her executive team can continue to do that despite slowing consumer demand and changing market conditions.

Wall Street analysts are eager to hear about plans for electric vehicles and hybrids, the company’s embattled Cruise autonomous vehicle unit, its China restructuring and GM’s near-term plans for free cash flow, lowering costs and rewarding investors.

Many of them are expecting GM will be more grounded in its near-term targets and messaging than it has in its most recent investor days, including three years ago, when Barra and others laid out ambitious long-term financial targets by to double the automaker’s revenue to about $280 billion by 2030.

“It’s clear we enter a very different industry environment vs. three years ago,” Barclays analyst Dan Levy said last week in an investor note. “Accordingly, whereas the theme for GM three years ago was “Growth Motors,” we believe the theme today is “praGMatic Motors.”

The company is expected to tout its “flexibility” when it comes to producing EVs, as well as vehicles with traditional internal combustion engines, commonly called ICE, at the event. To underscore that effort, the event is taking place GM’s vehicle assembly and Ultium EV battery plants in Tennessee. Spring Hill Assembly produces both types of vehicles.

Barra and other executives have stressed such a dual strategy since lowering or withdrawing nearly all of the company’s EV targets amid slower than expected adoption of electric vehicles.

“We are making the most of every opportunity we have in ICE and in EV and leveraging our core strengths,” Barra said during the company’s second-quarter investor call in July. “We’re being flexible and opportunistic, but also importantly, we’re being very disciplined.”

Despite this being the first GM investor day since November 2022, several Wall Street analysts have low expectations.

“Net, while we remain favorable on the stock, we don’t see a particularly attractive tactical risk/reward into the event,” UBS analyst Joseph Spak said in a Sept. 23 investor note.

But as Wolfe analyst Shreyas Pati points out, “relatively low” expectations could provide “room for GM’s message to be more constructive-than-anticipated.”

Heading into the event, GM’s stock has been under pressure as of late despite billions of dollars in buybacks. While shares are up roughly 28% for the year, they’re off 9% from a high of more than $50 reached in July and down about 8% from the beginning of last month.

The stock also saw a 5.4% drop in one day last month, its second-largest daily decline this year, due to Wall Street analyst downgrades of price adjustments.

Morgan Stanley and Bernstein recently downgraded GM and cut price targets, citing challenging market conditions and low upside potential, among other things.

They’re also worried about the company’s restructuring in China. That change was announced with little to no information of what should be expected, other than the company saying it was necessary after GM’s business in the country has been in a yearslong freefall.