Here's Why GM's Stock is Having Its Worst Day in over a Year

Dow Jones
10/20

The automaker lowered its full-year profit expectations as it plans to pause some truck production

Despite selling fewer vehicles than a year ago in the September quarter, General Motors reported better automotive revenue.

General Motors' production plans could mean fewer cars in the near term - as well as less profit overall.

The company's latest outlook is weighing on shares Tuesday. Down 5.3%, General Motors' (GM) stock is on pace for its worst single-day decline since July 22, 2025, according to Dow Jones Market Data.

GM expects a fourth-quarter downshift as it changes production lines to make newer models. Paul Jacobson, GM's chief financial officer, said on a call with investors on Tuesday that the company expects 35,000 fewer full-size pickups to be sold in the quarter compared with the same time in 2025.

Last quarter, the company shut down its Silao Assembly plant in Mexico for four weeks in preparation for making 2027 Chevrolet Silverado 1500 and GMC Sierra 1500 trucks there. Production at GM's facility in Fort Wayne, Ind., will stop in mid-December and restart in January, Jacobson told investors.

The company also said Tuesday that it expects some weakness in its international business, excluding China.

GM lowered its guidance for full-year 2026 adjusted earnings before interest and taxes, a measure of profit. It now expects Ebita of between $14.5 billion and $15.5 billion, compared with a prior target of as much as $16 billion.

On the positive side, GM raised its forecast for automotive free cash flow, or the money it has left over from its vehicle business after expenses.

"The stock will likely come under some pressure today as a result, but we would be buyers on a pullback," RBC analyst Tom Narayan wrote in a note to clients on Tuesday.

The carmaker posted third-quarter adjusted Ebita of $4.1 billion, up 22% from a year earlier. GM reported earnings per share of $3.70, up 32% from the same period in 2025.

The Detroit-based company said it made $45.7 billion from selling cars, a slight year-over-year increase, despite selling fewer vehicles. GM has benefited from its lineup of trucks and its resistance to boosting discounts, according to analysts.

GM on Tuesday also authorized a new $20 billion buyback program. That's the equivalent of about 30% of GM's overall market capitalization, Narayan said.

The company has been on a share-repurchase spree in recent years. It had 849 million shares outstanding as of Sept. 30, compared with 1.2 billion at the end of 2023.

Narayan, who has GM's stock rated a buy, added that GM maintained that next year will be stronger than this year. He said it is partially driven by the launch of new full-size pickups, GM's push into autonomous-vehicle technology and lower warrant and electric-vehicle costs. On a call with investors, CEO Mary Barra noted that GM's defense division recently notched several big contracts.

"The compelling products, technology, and services we are delivering for customers around the world make us confident in the consistent, long-term growth of our earnings and cash generation, as well as our ability to return capital to shareholders," Barra said in a letter to shareholders.

-William Gavin

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