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General Motors announced a new $6 billion share buyback plan to enhance profitability in its core business and grow in the electric vehicle sector. This move aims to return money to investors while focusing on improving the profitability of its electric and gas-powered vehicle businesses. The company plans to buy its shares "under favorable opportunities" after completing a $10 billion accelerated share repurchase approved last November. GM expects to exhaust the remaining $1.1 billion from the previous plan by the end of this quarter. GM’s decision follows strong momentum in the first quarter, driven by robust local sales of trucks and SUVs, which helped offset challenges in China and raise profit expectations for the year.
- The automaker is still investing in electric vehicles, but with the market growing slowly, it is prioritizing returning money to investors. Most of its investment in electric vehicles, including building the Ultium battery platform and cell factories, is nearly complete, allowing GM to continue producing electric models while buying back stock. In January, the company raised its quarterly dividend by 33% to 12 cents per share. GM confirmed that its electric vehicle business is expected to achieve operating profits in the second half of this year, with positive earnings before interest and taxes (EBIT) targeted for next year.
Why it matters
Following the buyback announcement, GM shares rose 1.6% in premarket trading and have increased 32% this year. GM is among 42 other S&P 500 companies that announced buybacks this quarter.
