GM’s shares soar as investors bet on fleet of self-driving cars

General Motors may have been founded in 1908, but investors long treated the automaker as though it were born in the Jurassic period — until now.

The automaker’s shares have soared 17 percent in the past month after hovering near their 2010 initial offering price for years, following a parade of analyst reports lauding its technology chops. Investors are betting that GM’s test fleet of self-driving electric cars can be converted into a lucrative robotaxi operation worth billions.

“Investors and the startups in Silicon Valley assume that GM and the other car companies are dinosaurs and it’s just not true,” said Morningstar Inc. analyst David Whiston, who has had a “buy” rating on the stock since January. “It’s not like they just started working on autonomous cars because of Tesla.”

Until recently, Wall Street viewed GM as a likely victim of a revolution brought about by self-driving vehicles that will render ride-hailing and car-sharing supreme over auto ownership. Companies with tech prowess, such as Tesla, Uber Technologies or Alphabet Inc.’s Waymo, would lead the autonomous road race.

These views are changing, Barclays analyst Brian Johnson said.

Tesla is stumbling in its early effort to get out its more affordable Model 3, while Waymo has concentrated its efforts on self-driving systems rather than building its own cars. Uber is dealing with a series of legal troubles and regulatory setbacks.

GM, meanwhile, is growing its Maven car-sharing business, planning 20 new electric models by 2023 and testing autonomous vehicles in several U.S. cities. Its Cruise Automation unit has said the company is able to mass-produce self-driving Chevrolet Bolts. Add those pieces together, and GM has what it needs to build a robotaxi business.

There has been a “fundamental shift in attitude which may very well prove to be permanent,” Johnson said in a report this month.

“Traditional automakers, and GM especially, are fundamentally better businesses today than they have been in the past,” he wrote in an Oct. 13 note to clients. “Whereas previously investors viewed GM as a dying dinosaur, investor attitude seems to be rotating that GM is instead an evolving mammal.”

Johnson raised his price target for GM shares to $55 from $41, the highest compiled by Bloomberg. Longer term, some analysts are even more bullish, with Citi’s Itay Michaeli writing this month that GM has a “path to $134” with its strong core auto business complementing a robo-taxi head start.

There’s even a view that GM could spin out its mobility business — and for a lot of money. Deutsche Bank’s Rod Lache estimates a separate unit could be worth $30 billion, nearly half of GM’s value today.

Though Lache’s report kicked off a monthlong rise in the stock, GM President Dan Ammann downplayed the possibility of a spinoff. For the time being, the company plans to keep all its capabilities under one roof, he said last week.