GM stock hits all-time high after Consumer Electronics Show
Detroit — Wall Street took heed of General Motors Co.'s aggressive electric and autonomous plans presented at the Consumer Electronics Show this week, sending GM's stock price soaring to nearly $51 Wednesday — its highest since emerging from bankruptcy more than a decade ago.
CES gave GM an opportunity to tell tech giants and EV geeks its plans to create a new battery technology and platform that the company says cuts costs and simplifies production. A future passenger-carrying drone concept also turned some heads.
After collapsing into federally induced bankruptcy in 2009, shares in the new GM opened trading in November 2010 at $33. Since then, GM has struggled to raise the price, making steady improvements in its business over the last decade that haven't always proven sufficient or sustainable.
A key reason: investor concerns about GM's ability to navigate successfully economic downturns as a legacy automaker with more liabilities and a more engrained culture than tech startups-turned-automakers. The question remains if GM can keep investors interested and the price high.
"I'm actually cautiously optimistic that this might finally be different," said David Whiston, a senior autos equity analyst for Morningstar Inc. "This might finally be the inflection point where we get more sustainability to the stock being at least in the mid to high $40s, if not better."
GM's shares closed Wednesday at $48.73, up 1.9%. Whiston noted that in the last year GM has proven it can withstand a downturn given how the company adapted to the economic uncertainty wrought by the coronavirus pandemic. GM sold 2,547,339 vehicles in 2020, down 12% from 2019. Its 2020 earnings will be released Feb. 10. It booked profits of $4 billion in the third quarter.
"It was ironically getting to the point the past few years where I felt like we actually had to have a recession so GM could prove that they were — and Ford, too — that they could ... get through this downturn," Whiston said.
"I'm hoping there's a permanent change in sentiment here, or at least a long-term change in sentiment until whenever the next recession happens, which is hopefully a long time from now."
GM has been pushing to transform itself into an EV automaker, even as it runs pickup and SUVs production lines at a brisk pace. Under the direction of CEO Mary Barra, the automaker has restructured to save billions — exiting unsuccessful markets, closing plants, reducing the salaried workforce, and focusing technology spending on an electrified future while capitalizing on profit-rich trucks and SUVs.
The automaker is promising to spend $27 billion on EVs and AVs and launch 30 EVs globally by 2025. It has partially rebranded itself and created a new GM logo with an "m" designed to look like an electrical plug.
"There's a renaissance of growth happening at GM," Wedbush analyst Dan Ives said. "They've made many mistakes, many black eyes in the past. But it's a golden age for EV ... a transformational opportunity. They're diving into the deep end of the pool and investors are taking notice."
GM and its crosstown competitors Ford Motor Co. and Fiat Chrysler Automobiles NV still haven't been matched by Wall Street with the likes of Tesla Inc. The Silicon Valley EV-maker's market value totals $806 billion — more than the Detroit Three, Toyota Motor Corp. and Volkswagen AG combined.
"Tesla is not treated in the market as an automotive company," Ives said. "It's treated as a technology disruptive [company]. Now, GM is starting to get a piece of that valuation as they're further and further focused on this market."
GM committed to zero emissions in 2017. Since then, it has developed a new battery technology called Ultium. It has large-format pouch style cells that can be stacked vertically or horizontally inside the battery pack, GM claims, allowing designers to optimize battery storage and layout for each vehicle's design.
Ultium can be used on a wide variety of vehicles, from the off-roading GMC Hummer EV to the Chevrolet Corvette. And it can be licensed to outside customers.
"We can orient the same scale cell to create very different vehicles within the same architecture of Ultium both in the pack and the dedicated architecture itself," GM President Mark Reuss said during a CES session on Wednesday.
The platform provides the flexibility "without changing over millions of dollars of tool sets in very different assembly plants for different architectures today with internal combustion engines between pickup trucks, heavy-duty pickup trucks, SUVs, and cars themselves," Reuss said.
GM's biggest news at CES was the introduction of BrightDrop, a new startup GM formed to aid delivery and logistics companies with electric software, services and a new electric delivery van called EV600. FedEx Express will be the first EV600 customer with 500 of the vans being delivered to the company in late 2021. It will be available to more customers by 2022.
GM's BrightDrop is entering the electric commercial market at the same time Ford is delivering its electric Transit in 2022. BrightDrop’s first product to market this year will be the EP1, an electric pallet that GM says can move product over short distances.
For GM, Ives says: "The next few years might be the some of the best years we've seen in the last 25 years because of EVs and where it's all shifted."