Entering text into the input field will update the search result below

A Deep Dive Into General Motors' Uncertain Future

Jun. 02, 2023 12:28 PM ETGeneral Motors Company (GM)42 Comments
Manuel Paul Dipold profile picture
Manuel Paul Dipold


  • General Motors faces declining sales, particularly in China, which accounts for 20% of its revenues.
  • The company is primarily focused on the North American market, with little presence in Europe and South America.
  • Despite a low valuation and dividend payments, the investment risk-reward ratio is not favorable due to uncertainties in the rapidly changing automotive market.

Klassischer roter 4-türiger Cadillac-Motorwagen aus den 1950er Jahren, der an der Strandpromenade geparkt ist.

umdash9/iStock Editorial via Getty Images

Investment Thesis

General Motors (NYSE:GM) has a low valuation on the surface, is profitable and pays dividends. However, a closer look shows that the number of cars sold tends to fall, especially in China, which still accounts for 20% of

This article was written by

Manuel Paul Dipold profile picture
My focus is on a total return style with long and short positions (10-30% short positions). My main expertise is the current technological and geopolitical shift with the amazing investment opportunities they offer. Therefore, I always try to find stocks or whole sectors with favorable risk-reward structures. My long investment style is a core-satellite strategy: The core consists of large caps and/or ETFs. The satellites around this core are small caps, potential 10-baggers, and undervalued stocks. In short selling, I focus on overvalued stocks that will fall back down sooner or later. My name is Manuel Paul Dipold. Born in Germany but lived 8 years in Asia. I am myself an entrepreneur and have many entrepreneur friends. I am not a professional investor but it´s a hobby I love. So I know Europe and Asia very well and seek undervalued or high-growth stocks - always with valuation, geopolitical and social shifts in mind.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (42)

GM has learned something that is very important for their future. You don't have to sell a car to everyone to be successful and have good earnings growth.. Profit Margins are critical for long term consistent profit growth. They are currently having great success on their margins and profitability and they plan to eventually do the same in EVs. They have not rushed to load the market with EVs because they need to ramp it up to levels where they can make good margins. The massive investment they are making in this infrastructure will payoff soon enough. They have eliminated the lower margin ICE vehicles and will fund the future EV growth with their high margin vehicles currently under great demand. Before long you won't be able to buy GM for anywhere near $40
Looking at the 10 year chart it seems that you are correct. There may be some upswing from the current price, but it doesn't look like the company can go further than its previous highs.
Tdot profile picture
Chart patterns are meaningless in the long term, as it only reflects past performance based on past investor mood, not future results. It certainly can "go further" if the profits and cash flow go further, and the dividends and expectations with them.

The price going forward depends on ever changing investor mood, not on some arbitrarily chosen historical trend line that resulted from the market environment and special causes.
Manuel Paul Dipold profile picture
The GM CEO says she doesn't see EVs beating ICE on profitability until at least the end of the decade, if not longer

F and GM are dogs
@Lower 40 release the hounds! release the hounds I say!
Build EVs with attractive body styles...that's as important as getting good mileage to buyers.
Ultium platform about to be launched.
Cruise Origin about to be launched.
PE is 5.
Only downside is UAW which Tesla does not have to deal with.
Long GM for Cruise division.
04 Jun. 2023
I think a view of GM is not complete without talking about Cruise.
Where does the author get his info....last I checked GM had the largest market share in South America (not a "pittance" as he suggests). Gm has been for years at or near the top in market share in South America
Manuel Paul Dipold profile picture
@AutoNut it's from GM's presentation. Where is your info from? I think Toyota is the most popular brand in south America
Udith Fonseka profile picture
@Manuel Paul Dipold Sorry---AutoNut is correct.
All the big manufacturers are there but Toyota,compared to its size is not over-represented. While GM Stellantis VW Renault are.
But you have made an interesting observation about GM'S Presentations.

Their Annual Report barely mentions anything outside the US.
Their main corporate web site, their stock market presentations---their press releases ---their monthly and quarterly sales reports--their investor news releases---their quarterly reports.
All of it highlights the USA. You would not know they have a thing outside of the States. Even Canada!! does not get much of a look-in.
Yet they have nearly half of their employees and half of their units are sold and or produced internationally.
I have never seen something like that, to this extent.
Even the SEC should look at it--as it is significantly misleading investors.
Why are they doing this so comprehensively?
The only thing I can think of, they are planning to split the company in two.
. Maybe keep Canada and (some Mexico plants) with the parent and
sell or IPO or spinoff the rest. Helps with China problem.
Call the new half-- INTGM Motors
Udith Fonseka profile picture
GM or Ford or Tesla
Stellantis is rarely mentioned but is the clear winner.
GM will have EV's, in numbers, within the next two years. GM will have autonomous taxis soon. GM has Super Cruise, and later this year, Ultra Cruise.

GM is well ahead of everyone in autonomy, and that's all you need to know. Nothing else matters.

Autonomy will change the industry, and the world, and GM is the leader.

GM will be there first, with the most. Nothing else matters.
@clcellve Auonomy?! As I understand 1st in autonomy is going to be TESLA!
@clcellve Cruise alone could be a massive business in even 10% of the cities Uber operates in. Add a purpose built vehicle from a proven scale manufacturer and it’s a win. People will much prefer driverless taxis.
@jraskib From what I have read I would put my money on Cruise or Waymo.
I’m long GM but completely open to criticism and a challenge of my long view… however, this article is crap by a short seller…no analysis of Cruise and the heavy EV investment which really should start bearing fruit by 2024… just saw the new Lyriq on the road and would any day over a Tesla…any that’s the bottom line cuz Stone Cold said so
Manuel Paul Dipold profile picture
@investor9899 it's always the same when I publish a bearish article: people who are long comment that the article is just crap. Bullish articles are criticized significantly less. too many people fall in love with their stocks and defend them emotionally. You can certainly pick out individual aspects of every company that are great; some people focus only on these and ignore the risks
@Manuel Paul Dipold Agree! For many years GM has been a dog! I have been with GM (bonds) since before it went BT (got stock after BT instead of Bonds), and still underwater. for many years there were just promises.
@Manuel Paul Dipold I am long GM and I appreciate your article. A bear might have picked up on something that I might have missed. China is a big concern for two reasons. One GM business is definitely down and two what if China becomes the next Russia ? Several companies will be hurt but definitely a major hurt for GM.

GM I like because of the low valuation, and the fact that even with all the problems they continue to earn solid profits every quarter, thinking ICE will go away but no where near as soon as most are thinking so GM ICE business will continue providing profits and I think Cruise business is a lottery ticket.
Common Shares profile picture
You can find how many vehicles they sell in the 10-K. Have you read the 10-K?
RickJensen profile picture
gm is likely in the first stage of a death spiral. China just speeds the process up.

Mary has wasted so much capital, that the company is now at risk.
$23B in buybacks and the price is lower than the IPO.
$4B in a strike that didn't have to happen.
$4 billion to $4.5 billion to get out of Europe. And that's not nearly all of it.
All the spending that's going into Cruise, and they may never see a penny in profit.
At F Farley knows this and so does VW.
"It's become very clear that profitable, fully autonomous vehicles at scale are still a long way off," Ford CFO John Lawler"

Now look at the difference between Tesla and F EV sales and gm's. Tesla sales are great. F EV sales are great. gm EV sales ONLY look good because they dropped the price of the Bolt by 27% (after already lowering it).

gm's Q1 sales of the Hummer, were 2, that's two, unit's. Lyriq sales are in the hundreds and not the thousands.

Finally F is funding their growth via cash, and FCF. And they are doing it on a massively larger scale than gm is spending. So, gm's answer, take out a 16B LOC.

gm is rudderless. They don't have a strategic plan. They react to everything. They should have bought out the Bolt owners and killed it right there. They finally decided to throw in the towel. They are putting out EVs that no one wants in large numbers. They are a hot mess.

Let the guys drive the vehicles in the ads, and get back to what they do best. Pickups and get a decent sports car (Camero) that doesn't cost $100K and doesn't apologize for performance. (What they did to that car is a crime, Mach-E outsells Camero and that's just sad).

And it's only likely to get worse. But fear not bag holders, Mary, "plans", "projects", "wants to be", but it's all years from now. Are they going to make it?
So, kill the divi. Stop Cruise. Build a lower cost EVs, shoot for $25-30K (profitable, even if small profits). Stop making commercials about tailgates.
@RickJensen and yet GM just crushes Ford on profitability quarter after quarter and year after year. It’s pretty amusing because GM spots Ford 2 billion in AV spend and still crushes them.
@J2568 don’t get me wrong……they are both horrible investments, but GM is a far better run company
RickJensen profile picture
"GM just crushes Ford on profitability".

No it doesn't. You clearly don't understand. gm got the margins (I'm guessing you are talking operating, since you appear to think there's only on) it got from the bankruptcy. It's done nothing buy go down hill since 2021.

F started out 25B in the hole. gm got much more than that in the bailout, for free. Since them F has grown to 40B in C&CEs. gm can't touch those numbers.

General Motors cash on hand ending March 31, 2023 was $28.208B
General Motors cash on hand 2022 was $31.303B
General Motors cash on hand for 2021 was $28.676B
General Motors cash on hand for 2020 was $29.038B

Ford Motor cash on hand ending March 31, 2023 was $39.513B
Ford Motor cash on hand for 2022 was $44.07B
Ford Motor cash on hand for 2021 was $49.593B
Ford Motor cash on hand for 2020 was $49.961B

You keep saying gm has better profitability, but the facts are, they only have better operating margins, and they didn't earn those. A wise investor knows to pay attention to all the data, not a tiny selection meant to make a point.

Your calculus is too limited and inaccurate. Your accounting appears to be non-existent.
Looks like another gm short seller when gm is having a nice up day.
tyler hammond profile picture
On a more bullish note:

Crusie continues to outpace all Autonoumous Vehicle competition (besides perhaps Waymo)

The Ultium battery platform is ramping up. Meaning GM will soon have more EV models then their US competition.

Silverado EV will have a longest range of EV trucks

Brightdrop has been picking up commercial customers and expanding nicely.
@tyler hammond Brightdrop is already producing at scale at a real automotive plant (CAMI) at the fastest turnaround rate in GM history. At some point fleet refreshes will happen and they will want EV and Brightdrop will be there to fill that gap - providing new software services revenue for GM. Under rated business.
Rex Rode profile picture
Basically after GM killing off the Bolt/Volt (which was a good call since it's been so problematic and ugly) they are starting from scratch with basically no other EV sales in Q1....I still think it's unbelievable why no one is asking Mary Barra why they only delivered only 3 Hummers in the entire quarter....GM has so much to prove. As always, there are so many promises while most of them go undelivered. I remember 2 years ago when Mary Barra was announcing to the world that "GM will have 25 new EV's by '25" as if it was campaign pitch. Basically, they may have 10 at the most with basically no new sales until late 2023. I still find it shocking that as long as Mary Barra has been at the helm they basically haven't produced any EV's while Tesla has absolutely crushed them and the competition in the US. Let's keep it real, Tesla delivers more EV in 2 days than GM did in the entire first quarter. Just let that sink in...Then ask yourself, "how did this happen."
GM would be smart to refocus their efforts on ICE machines that get great milage, pollute less, are stylish, functional, and are very cost effective.
Forget the urge to give in to the climate zealots, let that develop in its own time, if it is feasible. Right now it is the road to disaster ... get climate woke, go broke!

BTW ... China is not your future market, you cannot compete profitably.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About GM

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on GM

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.