GM CEO and chairman Mary Barra speaks throughout an “EV Day” on March 4, 2020 on the firm’s tech and design campus in Warren, Mich., a suburb of Detroit
DETROIT – Wall Road is anticipating rather a lot from General Motors’ two-day investor occasion that begins Wednesday afternoon – from particular income and earnings targets to new particulars about its electrical and autonomous automobile operations.
However what GM traders really need is a roadmap for sustainable shareholder progress. It is one thing the automaker has flirted with beneath CEO Mary Barra however by no means been in a position to retain.
The inventory has swung wildly beneath Barra’s reign, from a 60% surge in share worth to an nearly as large drop since she took the helm in January 2014, in response to FactSet. Earlier than this yr, shares of GM have been largely down since Barra took the reins. They’re now up by 36%, with nearly all of that progress coming this yr alone.
That kind of progress is what analysts imagine may proceed if GM can swiftly ship on its plans to rework the corporate — a minimum of in investor eyes — into extra of a expertise firm than a conventional automaker.
“With the core goal of GM’s investor day centered on demonstrating the expansion alternatives forward for GM, we count on a case to be made for GM a number of growth … which we imagine it deserves,” Credit score Suisse analyst Dan Levy stated in an investor observe Friday. “We imagine a transparent case may be made for GM inventory north of $100.”
Deutsche Financial institution analyst Emmanuel Rosner stated the occasion “may function a constructive catalyst for the inventory” if GM meets investor expectations, particularly relating to its plans for electrical and autonomous autos.
Morgan Stanley analyst Adam Jonas famous a number of key progress areas and enterprise alternatives for GM, whereas questioning whether or not the occasion will “merely reinforce what many already imagine about GM or can it catalyze a extra important change in strategic path?”
Like traders, Barra and her govt management group are hoping for the latter. Listed below are 5 methods GM goes to try to make that occur.
Traders ought to count on an unprecedented amount of details through the occasion, together with particular targets relating to income, revenue margins and the outlook on whole market measurement for early growth companies like self-driving taxis.
It is considered one of two issues Jonas believes will likely be essential for GM to perform: “Present the transparency and disclosure to assist the analyst and funding neighborhood to each mannequin and worth the corporate’s important tech-oriented enterprise items,” he stated in an investor observe final week.
GM’s income final yr was nearly $122.5 billion, down 10.8% in contrast with 2019 thanks largely to manufacturing facility shutdowns at the start of the coronavirus pandemic. It nonetheless made $6.4 billion in internet revenue for the yr whereas its adjusted working revenue was $9.7 billion, or $4.90 a share, in 2020.
The opposite essential factor for GM is leaving the “funding neighborhood with the sense of urgency that the corporate is taking the required steps to draw the required capital and expertise to permit GM’s capabilities to achieve success,” Jonas stated.
Barra and different GM executives corresponding to President Mark Reuss and CFO Paul Jacobson are anticipated to debate how the automaker is investing as quick as doable in electrical and autonomous autos to convey the applied sciences to market extra rapidly.
GM earlier this yr stated it might make investments $35 billion in electric and autonomous vehicles by 2025, up 30% from plans introduced late final yr.
Below that funding, GM has stated it might provide 30 new EVs by 2025. The corporate is anticipated to higher element its transition from an automaker closely reliant on autos with inner combustion engines to solely providing electric cars and trucks by 2035.
“We proceed to imagine GM gives a compelling EV technique, with one of the vital holistic and bold EV methods of legacy OEMs, underlying our constructive outlook on GM. That stated, it is now time for execution, as we await information factors indicating GM can keep market share and profitability in an EV world,” Levy stated.
The investor occasion general is anticipated to offer a “clear technique” in an effort to extend the corporate’s valuation to be extra like a expertise firm, very similar to Tesla is at greater than $740 billion. GM’s market cap is about $79 billion.
Dan Ammann, CEO of GM’s majority-owned autonomous vehicle subsidiary Cruise, will inform traders that it sees a path for its ride-hailing enterprise to succeed in $50 billion in income because it ramps up operations.
He will not element a particular timeline to hit such a milestone, however he is anticipated to clarify how they plan to construct it up quick, if not quicker, than different transformative companies, in response to an individual who’s conversant in the plans, which have been reported earlier by Bloomberg.
GM additionally is anticipated to debate extra particulars about its hands-free Tremendous Cruise driving system, which it has promised to offer on 22 models by 2023.
GM needs to extend recurring income and buyer loyalty by a brand new internally developed software program system for autos that it is calling “Ultifi.”
“That is a objective. The extra we combine our product into their lives and the higher we make … actually that is what we need to obtain. It isn’t a assure,” Scott Miller, GM vp of software-defined automobile, informed reporters final week throughout a name.
The automaker goals to combine the software program platform into prospects’ digital lives by software program options, apps and customized providers that will likely be frequently up to date remotely. That might embody paying for brand new providers corresponding to its hands-free freeway driving system and different applied sciences.
– CNBC’s Michael Bloom contributed to this report.