General Motors (GM, Financial) is set to release its earnings report this week, with Wall Street predicting an adjusted earnings per share of $2.32 and revenue of approximately $45.8 billion. This suggests a 20% decline in net profit from last year's peak. Investors are keenly watching the impact of new tariffs on GM's annual guidance. Analysts estimate that tariffs could reduce GM's 2025 earnings before interest and taxes (EBIT) by $4-5 billion, potentially lowering the annual EBIT target to $10-12.5 billion and putting pressure on second-quarter profit margins.
GM's management has pledged to recover about 30% of these losses through price hikes, cost reductions, and localization efforts. Any early signs of these offsetting measures and their impact on the income statement will influence market sentiment.
In the first quarter, GM's U.S. sales surged by 17%, increasing its market share to 17.2% and leading major automakers. Investors are eager to see if this growth can continue amid rising car prices. The performance of electric vehicles is another crucial factor, with delivery growth exceeding 90%, making GM the second-largest EV manufacturer in the U.S. with a 12% market share, trailing only Tesla (TSLA).
GM's capital return policy could also act as a stock price catalyst. The management has paused the remaining $4.3 billion stock buyback authorization pending clarity on tariff developments. A clear timeline from management, even if earnings meet expectations, could boost the stock price.
