Gm’s fiscal 2022 guidance missed expectations. Will its electric vehicle transition work?


Gm shares were down 2.8% in Tuesday afternoon trading, changing hands at $49.32, a move that would extend the stock’s six-month decline to about 8.6%.Last week, GM reported stronger-than-expected fourth-quarter earnings of $1.35 a share, or $2.8 billion, on sales of $33.58 billion.Estimated 2022 adjusted EPS in the range of $6.25 to $7.25, with total global vehicle sales of approximately 1.477 million units.Gm also said it would increase its overall capital spending on electric vehicle production by $35 billion over the next three years as it competes with rivals Ford and Tesla TSLA in the fastest-growing segment of the global auto market.Morgan Stanley chief auto analyst Adam Jonas downgraded GM to equal weight from overweight in a research note.He also noted that he lowered his 12-month price target for GM shares to $55 from $75, 8.5% higher than Monday’s closing price, because of concerns about the pace of gm’s transition to electric vehicles.And noted that its shift to electric vehicles could generate negative compound annual growth rates in terms of overall revenue between now and the end of the century.Adam Jonas added that GM’s near-term outlook, including a 2022 profit forecast of about $14 billion and annual capital expenditures of about $10 billion over the next few years, led to “the most significant downward revision we’ve made on GM.COVID-19 in early 2020…Our revised earnings per share of $6.64 were approximately 11% lower than our previous forecast.””We now expect GM to remain an integrated company for at least the next 12 to 18 months as management builds its electric vehicle, autonomous driving and connectivity capabilities,” Adam Jonas said.”We remain concerned about traditional Oems moving from internal combustion engines to electrification, and we model this by predicting that GM will be a smaller company in the future.”

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