General Motors authorises another $6.0 billion in stock buyback

on Jun 11, 2024
  • GM did not disclose the timeframe for the new stock buyback programme.
  • Here's what its CFO Paul Jacobson said in a press release on Tuesday.
  • General Motors stock is currently up some 40% versus its YTD low.

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General Motors Co (NYSE: GM) is gaining in premarket on Tuesday after announcing a new stock repurchase programme. 

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CFO Jacobson’s remarks on the buyback programme

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The legacy automaker authorised another $6.0 billion in share buybacks. Its accelerated $10 billion in stock repurchase is slated to complete by the end of June. 

GM did not disclose any particular timeframe to execute the new authorisation. All it said is that the programme will enable it to opportunistically buyback shares. Paul Jacobson – the chief financial officer of General Motors said in a press release today:

We’re very focused on the profitability of our [internal combustion engine] business, we’re growing and improving the profitability of our EV business and deploying our capital efficiently. This allows us to continue returning cash to shareholders.

General Motors stock is currently up some 40% versus its year-to-date low. 

General Motors is currently facing an EV slowdown

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General Motors remains committed to shareholder returns even though its big bet on electric vehicles has met with uncertainty amidst slower-than-expected adoption. 

Still, the chief of finance lauded investments the automotive behemoth has made in recent years as they are “delivering consistently strong revenue growth, margins and free cash flow.”

In April, GM reported its financial results for the first quarter that handily topped Street estimates. The New York listed giant also raised its guidance for the full year at the time. 

Note that General Motors shares pay a dividend yield of just over 1.0% at writing which makes them more attractive to own as well. 

Should you invest in General Motors stock?

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General Motors stock has performed exceptionally well since the start of this year but a Barclays analyst is convinced it’s not out of juice just yet. 

Dan Levy currently rates GM at “overweight”. His $55 price target suggests potential for another 20% gain from here. Other investment firms that remain bullish on the automotive company include Morgan Stanley which expects it to benefit as trade tensions resurface between China and the United States.

Envestnet Asset Management, however, trimmed its stake in the $54 billion company based out of Detroit, Michigan by over 7.0% in the fourth quarter. The hedge fund still owns more than 2 million shares of General Motors, though.

For 2024, GM has forecast up to $10 per share of earnings and adjusted automotive free cash flow in the range of $8.5 billion to $10.5 billion.

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