Capital Calls: GM is a wannabe speedy that is stuck in slow lane

2 minute read

Mary Barra, CEO of General Motors, speaks at the 2017 SelectUSA Investment Summit in Oxon Hill, Maryland, June 19, 2017.

MELBOURNE, May 5 (Reuters Breakingviews) - Concise insights on global finance.


VROOM-DOOM. General Motors (GM.N) boss Mary Barra has much to be proud of. The $80 billion carmaker’s $3 billion first-quarter net profit blew past estimates. Unlike Ford Motor (F.N), it reiterated its 2021 earnings guidance despite a disruptive chip shortage. And its 12-month 155% share price increase bests traditional rivals.

GM now trades at a higher multiple of the next 12 months’ estimated earnings than Ford and usual leader Toyota Motor (7203.T). Yet a valuation of 10 times earnings implies investors expect no growth. True, Stellantis (STLA.MI) reckons the chip crisis could last into 2022 read more , longer than Ford and GM expect. But it must irk Barra that shareholders refuse to ascribe the same sort of value to GM’s electric and autonomous tech that new entrants enjoy. Scandal-hit Nikola’s (NKLA.O) enterprise value trades at 34 times the next 12 months’ sales; GM’s is a measly 0.5 times. That leaves Barra stuck squarely in the slow lane. (By Antony Currie)

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