GM reworked its 2026 profit map on Tuesday, raising the floor but trimming the ceiling. The company now expects adjusted EBIT of $14.5 billion to $15.5 billion, versus July's $14 billion to $16 billion. CEO Mary Barra cautioned about "clear external headwinds" that in some cases are "intensifying."
The board also approved a fresh $20 billion buyback to be executed over multiple years. This marks the first such buyback notice since a $6 billion plan in January, and comes in addition to the $29.5 billion expended since 2023. Since 2015, GM has repurchased almost $43 billion of stock, which has reduced the share count by 45% to 849 million at the close of the third quarter.
The latest quarter cleared the consensus bars. Revenue for the three months to Sept. 30 was $50 billion, EBIT came in at $4.1 billion against a $4.02 billion estimate, and EPS landed at $3.70 versus $3.56 expected. Automotive free cash flow rose 40% to $5.9 billion, supporting the buyback engine.
Shares fell anyway as the market focused on the tighter outlook. The stock dropped as much as 7.5% intraday - the biggest since July 2025 - and was recently down 5.3% at $78.37 at 9:35 a.m. in New York. It is down about 3.6% year to date. As Dan Ives of Yorkville Ives & Co. put it, "The market was looking for another guidance raise on the back of the stronger quarter and got a narrowed range instead."
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Under the hood, demand for high-priced pickups and SUVs remains firm, particularly among affluent, loyal buyers. But volumes are slipping in the U.S., GM's most important market, as more consumers are priced out of new vehicles. Sales also declined in China; GM generated $32 million during the quarter, a 60% drop from a year earlier, while South America posted a slight increase.
After costly writedowns tied to electric and self-driving efforts, GM is doubling down on core franchises and cash returns. All-new Chevrolet Silverado and GMC Sierra pickups debut later this year, with plans to expand production and build more trucks equipped with premium V-8 engines. The company is also moving into adjacent work like supplying parts for Lockheed Martin missiles and leaning into software-led features through OnStar Telematics and Super Cruise.
GM has not been a major backer of hybrids, favoring all-electric models instead. That said, Barra signaled readiness to add hybrids, saying, "We will have hybrids in our portfolio in multiple segments, the key segments that we participate" in, with more details to come closer to launch. CFO Paul Jacobson told Bloomberg TV, "The team has done a really good job of being resilient in the face of external pressures, and we're continuing to work at it."
You are getting a larger buyback alongside a profit range that tightened rather than rose. Barra added, "While the path forward is more challenging, we continue to believe that 2027 will be another strong year and better than 2026, assuming customer demand remains strong and commodity logistics and other recent cost pressures moderate." In plain English: cash returns look well supported by free cash flow, while growth depends on resilient truck and SUV demand, potential hybrid launches, and whether cost and demand pressures ease.
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