Why General Motors Stock Is Sinking After Its Earnings Beat

General Motors (GM) stock is sinking Tuesday despite the auto company beating top- and bottom-line expectations for its fourth quarter and issuing a better-than-expected profit forecast for 2025.

In the three months ending December 31, GM's revenue increased 11% year over year to $47.7 billion. Its earnings per share (EPS) surged 54.8% to $1.92.

"We grew full-year revenue 9%, once again we led the U.S. market in total, retail, and fleet deliveries, we grew our market share, and we distanced ourselves from the industry's pricing, incentive, and inventory pressures," wrote General Motors CEO Mary Barra in her Q4 Letter to Shareholders. "We doubled our electric vehicle market share over the course of the year as we scaled production, and our portfolio became variable profit positive in the fourth quarter."

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The results topped analysts' expectations. Wall Street was anticipating revenue of $43.6 billion and earnings of $1.84 per share, according to Yahoo Finance.

For the full fiscal year, General Motors said it expects to achieve earnings in the range of $11 to $12 per share, representing growth of 3.8% to 13.2% from the $10.60 it earned in 2024. The forecast also came in well ahead of analysts' expectations for earnings of $10.76 per share.

"As we look to the year ahead, we will continue to allocate capital consistently and in a balanced manner, and our vehicle portfolio will continue to get stronger," Barra said. "For example, we will offer three stunning new Cadillac EVs – the ESCALADE IQ, OPTIQ and VISTIQ – and we're targeting further improvements in EV profitability as we continue to scale.”

Despite General Motors' strong results, the stock could be selling off today on concerns over President Donald Trump's recent commentary on potentially imposing blanket 25% tariffs on Canada and Mexico.

Is General Motors stock a buy, sell or hold?

General Motors has outperformed the broad market over the past 12 months, up 58% on a total return basis (price change plus dividends) vs the S&P 500's 25% gain. And Wall Street thinks the consumer discretionary stock has more room to run.

According to S&P Global Market Intelligence, the average analyst target price for GM stock is $60.01, representing implied upside of nearly 20% to current levels. Additionally, the consensus recommendation is Buy.

Financial services firm CFRA Research raised its rating on GM stock to Hold from Sell and its price target to $55 from $45 following Tuesday's earnings release.

CFRA Research analyst Garrett Nelson notes that this was General Motors' 10th straight bottom-line beat and came "despite concerns that GM's year-over-year comparisons should be much more difficult in 2025 and the company could lose market share in the near- and intermediate-term due to its lack of hybrid vehicle offerings

However, he warns that "GM's automotive free cash flow should be about $2 billion lower in 2025, as capex remains significant."

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