GM slips after Bernstein warned on earnings headwinds, Capital Markets Day risk

General Motors (NYSE:GM) moved lower in early trading on Monday after Bernstein lowered its rating on the auto stock to Market Perform from Outperform.

“Our data signals rising earnings headwinds, and we think there is a risk the company will announce additional capital requirements during its October CMD,” said Bernstein.

Analyst Daniel Roeska warned that continued inventory build in the U.S. will lead to pricing headwinds next year, a delayed ramp on electric vehicles, and push Cruise losses into next year. Headwinds in GM’s (GM) international businesses were also noted to be increasing.

Roeska and his team think that GM’s (GM) Capital Markets Day in October could jolt shares if the auto giant provides updates on its electric vehicle and software strategies that include the need for additional capital requirements. Those extra investments could negatively impact free cash flow and cut into shareholder distributions by a significant amount. “Given the risk of declining earnings in ’25e and potentially higher investment needs in the business, we see the risk balance skewed to lower FCF,” noted Roeska.

Shares of General Motors (GM) fell 2.55% in premarket trading to $47.65. GM has been one of the best performing auto stocks of 2024 with a rally of more than 36%.