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.