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General Motors Swings to Profit in Q2; Shares Slip 4.4% Pre-Market
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General Motors Swings to Profit in Q2; Shares Slip 4.4% Pre-Market

Shares of global vehicle manufacturing firm General Motors (GM) lost nearly 4.4% in pre-market trading on Wednesday despite its strong financial results for the second quarter of 2021. The company designs, produces and sells trucks, cars and automobile parts under brands like Cadillac, GM, Buick and Chevrolet.

Adjusted earnings per share (EPS) came in at $1.97, beating the Street’s estimate of $1.34. The company had recorded a loss of $0.50 per share in the second quarter of 2020.

Quarterly revenue totaled $34.2 billion, higher than analysts’ expectations of $29.11 billion and the year-ago revenues of $16.8 billion. (See General Motors stock chart on TipRanks)

General Motors sold 1.76 million vehicles across the world during the quarter, compared to 1.47 million vehicles last year. Automotive sales amounted to $30.7 billion, significantly more than $13.4 billion reported in the second quarter of 2020.

The Chairman and CEO of General Motors, Mary Barra, said, “There will be challenges, but we now expect full-year EBIT-adjusted in the range of $11.5 billion to $13.5 billion, compared with $10 billion to $11 billion previously…We also plan to source 100% renewable energy to power our U.S. sites by 2030, global sites by 2035, and to become carbon neutral in our global vehicles and operations by 2040.”

Furthermore, for 2021, the company expects adjusted EPS to be in the range of $5.40 and $6.40.

Last month, Bank of America Securities analyst John Murphy reiterated a Buy rating on the stock and increased the price target to $90 from $80 (55.5% upside potential).

In a research note to investors, the analyst said, “The current semiconductor shortage that is dragging on sales is creating additional pent-up demand to be more rationally released over a multi-year recovery.”

Overall, the stock has a Strong Buy consensus based on 14 Buys and 1 Hold. The average General Motors price target of $74.73 implies 29.1% upside potential to current levels. The company’s shares have gained 124.3% over the past year.

According to TipRanks’ Smart Score rating system, General Motors scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.

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