General Motors Profit Outlook Disappoints, Stock Sinks

General Motors Co. (NYSE:GM) stock fell more than 7% in Tuesday’s premarket trading after the automaker’s narrowed 2026 adjusted profit outlook fell short of Wall Street expectations, overshadowing better-than-expected third-quarter results. Strong demand for pickup trucks and SUVs, improved North American profitability and cost controls supported the results. However, concerns over commodity inflation, logistics expenses and memory chip costs weighed on investor sentiment. General Motors Beats Third-Quarter Earnings And Revenue Estimates General Motors reported third-quarter revenue of $50.015 billion, up 2.9% year over year and above analysts’ estimate of $48.697 billion. Adjusted earnings rose 32.2% to $3.70 per share, beating the $3.63 consensus estimate. Adjusted earnings before interest and taxes (EBIT) climbed 21.6% to $4.1 billion. The adjusted EBIT margin expanded to 8.2% from 6.9% a year earlier. The company attributed the improvement to higher sales volumes, cost efficiencies and stronger performance in its core automotive business. Adjusted automotive free cash flow jumped 40% to $5.88 billion, supported by higher automotive earnings and tariff timing. General Motors ended the quarter with $23.1 billion in automotive cash, exceeding its targeted average of $18 billion. North American Profits Surge 43% General Motors’ North American business remained a key earnings driver. Revenue reached $41.4 billion, while adjusted EBIT surged 43.4% to $3.59 billion. The segment’s adjusted EBIT margin expanded 250 basis points to 8.7%. Higher wholesale volumes, a favorable vehicle mix, warranty improvements and electric vehicle inventory adjustments boosted profitability. However, rising commodity, logistics and manufacturing costs partially offset those gains. Meanwhile, international adjusted EBIT plunged 87.7% to $28 million. General Motors Financial’s adjusted earnings before taxes fell 16.9% to $668 million. In China, General Motors’ automotive joint venture posted its eighth consecutive profitable quarter, supported by strong new energy vehicle sales. Pickup Truck And SUV Demand Remains Strong General Motors’ quarterly wholesale vehicle sales increased to 1.03 million units from 980,000 a year earlier. Light-duty full-size pickup sales rose 9%, while sales of the company’s small SUV lineup jumped 27%. The company also maintained its leadership in U.S. fleet sales for the fourth consecutive quarter, supported by demand from commercial and government customers. The automaker continued to prioritize pricing discipline. Incentives averaged 4.8% of the manufacturer’s suggested retail price, below the industry average of 6.6%. However, global vehicle deliveries declined 11% to 1.4 million units, primarily reflecting weaker EV sales and discontinued models. See More: Top Value Stocks OnStar And Super Cruise Drive Digital Growth General Motors continued expanding its digital services business. OnStar’s deferred revenue rose 40% year over year to $6.8 billion. The automaker also delivered approximately 83,000 vehicles equipped with its Super Cruise hands-free driving technology during the quarter. General Motors expects realized revenue from its digital services business to exceed $3 billion by the end of 2026, with deferred revenue approaching $7.5 billion. General Motors Narrows 2026 Earnings Outlook General Motors narrowed its full-year adjusted EBIT forecast to $14.5 billion to $15.5 billion from its previous range of $14 billion to $16 billion. The company expects adjusted automotive free cash flow of $11.5 billion to $12.5 billion. It also narrowed its GAAP earnings forecast to $9.72 to $10.72 per share from $8.98 to $10.98, compared with the analyst estimate of $10.27. The company narrowed its full-year 2026 adjusted earnings guidance to $12.75 to $13.75 per share from $12 to $14 per share, compared with analysts’ estimate of $13.41 per share. $20 Billion Stock Buyback Authorization The company completed its $6 billion share repurchase program announced in January 2026. The board also authorized a new $20 billion multiyear share repurchase program. Additionally, General Motors declared a quarterly dividend of 18 cents per share, payable Dec. 17 to shareholders of record as of Dec. 4. Looking ahead, management expects a strong 2027, assuming vehicle demand remains resilient and commodity, logistics and other cost pressures ease. The company expects growth from its next-generation Chevrolet Silverado and GMC Sierra pickups, increased SUV production capacity and continued expansion of OnStar and Super Cruise services. General Motors Price Action: General Motors shares fell 7.16% to $76.82 in Tuesday’s premarket trading, according to Benzinga Pro data. Image via Shutterstock Read Also: Tom Lee Predicts S&P 500 At 8,400 By Year-End, Says Midterm Elections Could Trigger ‘Risk-On’ Rally in Tech Stocks and Crypto: ‘We Are in an Unprecedented Time’