GM shares slide over 7% despite approval of $20 billion buyback

what happened

General Motors lifted its full-year cash-flow forecast with its October 20 results, yet the midpoint of its adjusted operating-profit guidance stayed where it was. According to GuruFocus, citing Stock Analysis quote data, the shares changed hands at $76.50 in premarket trading, 7.55% lower, at 9:02 a.m. ET. The new $20 billion repurchase authorization did little to offset that reaction.

GM now projects adjusted automotive free cash flow of $11.5 billion to $12.5 billion, versus the earlier $9.5 billion to $11.5 billion, which moves the midpoint up by $1.5 billion, or 14.3%. Adjusted EBIT guidance was narrowed to $14.5 billion to $15.5 billion, with the midpoint still at $15 billion. Third-quarter revenue came in near $50.02 billion and adjusted EBIT reached $4.11 billion.

why it matters

Investors weighed the stronger cash generation, which gives the company more financial room, against a profit midpoint that did not change, so revenue growth still needs confirmation. GuruFocus's GF Score rates GM at 79 out of 100, with stock momentum as its strongest area and financial strength as a weaker one. A buyback permission by itself does not reduce the number of shares outstanding, and the program can be halted, so actual payments and purchases will be the real test.

market impact

US autos: stronger cash-flow outlook supports buybacks, but unchanged profit guidance weighs on GM shares.

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