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Excitement Around The Future Of GM May Already Be Priced Into The Stock

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Excitement Around The Future Of GM May Already Be Priced Into The Stock

General Motors Company (NYSE: GM) offered a glimpse into its future ambitions which begs the question: Is this a "sell the news" announcement? Morgan Stanley's Adam Jonas may think so. The analyst maintains an Overweight rating on General Motors' stock with an unchanged $43 price target, which implies minimal upside from Monday's close of $42.15.

General Motors' vision of the future implies it can be "better and faster" than its rivals. The company is, after all, venturing into a new but crowded space and it is too early to declare the company as being a best in class player — or even a dominant player. Based on the analyst's checks and conversations with industry experts, it may be safe to conclude at this time that GM Cruise is "ahead of some competitors, but possibly behind others" (see Jonas' track record here).

Also, it is difficult to value General Motors' today based on its future prospects, the analyst continued. At this point, General Motors' Cruise Automation is worth $2 billion based on a "best guess," which is notably below Tesla Inc (NASDAQ: TSLA)'s "Tesla Network" at just under $14 billion and implies a nearly 1-percent market share of total global miles traveled by 2030.

"Some investors that we have spoken with believe that GM's autonomous business could be worth as much as a multiple of this," the analyst wrote. "We note these assumptions are highly subjective and highly sensitive to changes in profitability, market share and discount rate."

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Is GM Finally Getting The Props It Deserves?
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Image Credit: Mikerussell at English Wikipedia [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Latest Ratings for GM

DateFirmActionFromTo
Nov 2020Morgan StanleyMaintainsOverweight
Nov 2020Credit SuisseMaintainsOutperform
Oct 2020BarclaysMaintainsOverweight

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