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GM stock hits all-time high after Consumer Electronics Show

Kalea Hall, The Detroit News on

Published in Automotive News

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 over $51 Thursday — 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."

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.

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