GM’s Shares Set to Surge 35% as It Accelerates Ahead of Tesla

General Motors Co. (GM) has been making significant strides after trailing Tesla Inc. (TSLA) early last year. Over the past six months, GM’s stock has surged impressively, reigniting investor confidence that this iconic automaker remains a formidable player in today’s automotive landscape. Although Tesla briefly surpassed GM as the largest U.S. automaker by market capitalization, GM reclaimed its top spot following a remarkable rally in late 2017. Industry experts now suggest the stock could climb another 35%, according to insights from Barron’s.

Stock Market Momentum

Brian Johnson, an analyst at Barclays, has set a price target for GM at $57, representing nearly a 35% upside from its recent closing price of $42.39. This rebound follows a robust earnings report released on Tuesday, helping the stock recover from last week’s market downturn.

Year-to-date, GM’s shares have appreciated by 3.4%, while Tesla’s have increased by 10.8%. Over the past 12 months, Tesla’s stock rose approximately 34%, whereas GM’s shares grew by nearly 21%. Notably, GM’s gains were concentrated in the latter half of last year, with a 20% increase in just six months, contrasting Tesla’s 5% decline during the same timeframe.

Trading at about seven times forward earnings estimates, GM’s stock is among the most attractively valued within the S&P 500, as reported by Barron’s. If GM can continue to shed its outdated image and demonstrate innovation, its shares could be a compelling buy. A key area where GM is proving its mettle is in the autonomous vehicle sector.

Leading the Autonomous Vehicle Revolution

Late last year, GM announced ambitious plans to launch a fleet of self-driving taxis in select cities during 2019. While Tesla, under Elon Musk’s visionary leadership, often captures headlines for cutting-edge innovation, GM is showing it remains a serious contender in the autonomous vehicle arena. Car and Driver magazine even praised GM’s Bolt electric vehicle, highlighting its ability to travel 190 miles on a single charge at highway speeds, giving Tesla a competitive challenge.

GM’s financial strength provides a significant advantage over Tesla. As a relatively new automaker, Tesla is experiencing rapid cash burn, spending $1.1 billion in Q3 last year. In contrast, GM’s expenditures totaled $1 billion during the same quarter, but with a substantial revenue of $33 billion compared to Tesla’s $3 billion, according to Business Insider.

Nevertheless, GM faces potential headwinds from a possible cyclical downturn in auto sales. U.S. auto sales declined by 2% last year, rising interest rates may suppress new auto loan demand, and an expanding inventory of late-model used cars could pressure sales volumes. These factors might contribute to several years of declining sales and subdued stock performance. (For further analysis, see: General Motors Stock Could Face Multi-Year Challenges.)

Despite these challenges, GM reported an adjusted earnings per share (EPS) of $1.65 for Q4, marking a 21.3% increase from the previous year and surpassing consensus estimates of $1.39, as noted by Barron’s.

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