GM Stock Jumps on Reinstatement of Full-Year Guidance, Share Buyback Plan
General Motors (GM) shareholders showed just how happy they were with the company’s news Wednesday morning that it was reinstating its full-year guidance as well as engaging in a $10 billion share buyback plan.
The company suspended its full-year financial guidance after it reached a tentative deal with the United Automobile Workers (UAW), as it needed to figure out just how much the walkout cost – and what the new 4.5-year deal will cost. Officials figured out the strike cost GM $1.1 billion, which was not enough to derail the company’s profitability for 2023.
After announcing the reinstatement of its full-year 2023 earnings guidance, a $10 billion accelerated share repurchase (ASR) program, and its intention to increase its common stock dividend by 33% beginning the first quarter of 2024 – from 9 cents to 12 cents a quarter – the stock started moving.
The company’s stock jumped more than 6% in pre-market trading after closing Tuesday at $28.89 a share. It was trading at $30.75 within an hour of the release of the news, at about 6:30 a.m. EST. It has continued to rally since then, opening the day at $31.87 and rising into the low $32 range, good for an 11% bump.
What’s All the Fuss?
The automaker now predicts full-year adjusted profits in the region of $11.7 billion to $12.7 billion, down from its prior forecast of $12 billion to $14 billion. Diluted earnings, GM said, would likely come in between $7.20 and $7.70 per share, compared to its prior range of between $7.15 and $8.15 per share.
“GM will deliver very strong profits in 2023 thanks to an exceptional portfolio of vehicles that customers love and our operating discipline,” said GM Chair and CEO Mary Barra in a statement. She also noted the company’s adjusting its 2024 budget to ensure it remains in the black.
“We are finalizing a 2024 budget that will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs,” she added. “With this clear path forward, and our strong balance sheet, we will return significant
