GM profit falls but shares rise on earnings beat
General Motors is finding its investments in self-driving tech and ride-hailing service Lyft are paying off — at least when it comes to impressing Wall Street.
Even though profit fell — it earned $2.5 billion before taxes in the third quarter, down 32% from the $3.7 billion a year ago — the automaker beat expectations.
Analysts weren’t caught by surprise. GM warned in July that its profits might decline in the second half of 2017 as it cut production of slower selling cars and retooled several plants for pro- duction of new crossover and
SUV models.
Investors have taken a brighter look at GM in recent months, largely because of a perception the company is moving quickly in developing autonomous mobility technology. In early 2016, the largest U.S. automaker invested $500 million in the ride-hailing business Lyft and acquired Cruise Automation, a San Francisco-based company focused on autonomous vehicle technology.
“We are managing the business with discipline to drive strong performance today, while invest- ing in higher-return opportunities, including those that will shape the future of transportation,” CEO Mary Barra said in a statement.
On a net-income, after-tax basis for the third quarter, the automaker lost $3 billion, but that reflected $5.4 billion in accounting charges for the sale of its Opel and Vauxhall European brands to PSA Group. Still, the results were better than most Wall Street analysts were expecting.
GM shares have risen about 30% so far this year. Investors responded by driving the price up by almost 3% Tuesday to close at
$46.48, up $1.33 a share.
The results for the July-September period translated to $1.32 per share, beating Wall Street’s expectations. Analysts, on average, were forecasting between
$1.11 and $1.15 per share.
The bulk of GM’s third-quarter profit again came in North America, where its U.S. sales rebounded in August and September after falling in July. GM and other automakers are expecting U.S. sales to slow gradually as consumers shift from passenger cars to trucks, SUVs and crossovers.