General Motors Co. (NYSE: GM) stock had a stellar 2024, rising nearly 50%. The company was outperforming all its peers like Ford Motor Co. (NYSE: F) and Stellantis N.V. (NYSE: STLA) in the auto/tires/trucks sector firing on all pistons, but shares are down 9.2% year-to-date (YTD). Fears of the negative impacts of Trump’s tariffs and executive orders continue to plague the stock. The levying of 25% steel and aluminum imports is expected to drive up new car prices by an additional $1,000 to $9,000, further stifling demand.
The executive orders aimed at revoking Biden’s “EV mandates” and the potential for new automotive tariffs in April are also of concern for investors, asking them to ponder what kind of impact it will have on General Motors business moving forward.
The Last Quarter of Stellar Results?
General Motors has been on a run of solid performance, but investors fear that it may be coming to an end. The company reported fourth-quarter earnings of $1.92 per share, beating consensus estimates by 7 cents. Revenues grew 11% YoY to $47.7 billion, beating $44.98 billion consensus estimates by just over $2.7 billion. Adjusted earnings before interest and taxes (EBIT) rose 42.8% YoY to $2.5 billion.
Automotive operating cash flow rose 1.6% YoY to $4.76 billion. The company took a $5 billion charge for restructuring, impairment on certain interests in China and $500 million in charges regarding its decision to terminate funds for the Cruise Robotaxi division.
General Motors Still Issued Upside Guidance Assuming No Tariff Impacts
The company provided upside guidance again for the full year 2025, forecasting $11.00 to $12.00 in earnings per share versus $10.86 consensus estimates. Adjusted EBIT is expected to be between $13.7 billion and $15.7 billion. However, the guidance does not take into consideration the potential impact of tariffs, which caused shares to gap down the following day by 9%.
CEO Mary Barra also confirmed that their 2025 estimates assumed no negative impacts from outsourced imports and regulations on EVs.
However, she did comment, “We are prepared to mitigate the impact from tariffs but will not spend large amounts of capital without a clear objective.” Barra added, “It remains to be seen how things will evolve…and whatever happens on this front, we have a very broad and deep portfolio of ICE vehicles and EVs that are both growing market share and will be agile and execute as efficiently as possible."
The Potential Impact of Trump’s Tariffs and Executive Orders
On the bright side, General Motors is an American Big 3 automaker, and Trump's policies are aimed at protecting American manufacturers. However, General Motors imports up to 20% of its parts from China and up to 29% of its parts from Mexico. Both of these are subject to tariffs of 25% for Mexican and at least an additional 10% for Chinese imports. Additionally, the EV tax credit suspension will likely impact demand for General Motors's EVs.
GM Stock is in a Head and Shoulders Pattern
The head and shoulders pattern is a bearish reversal formation with three peaks—a left shoulder, a higher head, and a right shoulder—connected by a horizontal neckline. A breakdown occurs when the price drops below the neckline after the right shoulder, while a reversal is signaled if the price climbs back above the right shoulder's peak.
GM formed a bearish head and shoulders pattern, with its head peaking at $61.24. The right shoulder peaked at $55.21. GM fell below its daily anchored VWAP support at $49.99 to the $46.24 fib after the Q4 earnings release. GM is attempting to rally back above the neckline at $48.37 to prevent the breakdown from following through.
The daily RSI is also attempting to rise at the 43-band. Fibonacci (Fib) pullback support levels are $46.24, $43.80, $42.27 and $40.72.
GM stock’s average consensus price target is 23.54% higher at $59.71, and its highest analyst price target sits at $96.00. It has 10 analysts' Buy ratings, 3 Sell and 7 Hold Ratings. The stock has a 2.61% short interest.
Actionable Options Strategies: Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered calls at upside Fib levels executes a wheel strategy for income in addition to the 0.99% dividend.
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