Is GM stock a buy at its ATH after pivoting away from EVs?

The GM stock price has soared to a record high as the company’s published its quarterly results and lowered its electric vehicle ambitions. General Motors rose to a high of $70.2, up by 70% from its lowest level in April when Donald Trump launched his trade war. This recovery has brought its market capitalization to over $64 billion.

Stable revenue growth and pivot from the EV business 

General Motors stock price has done well after publishing its financial results last week.

The company, which is the parent company of brands like Chevrolet, GMC, Buick, and Cadillac, is doing well in a difficult market environment.

Its revenue came in at $48.5 billion in the last quarter, largely flat from what it made in the same period last year. This happened as the company achieved the highest third-quarter market share in the US and returned its Chinese business to profitability.

Its profitability was affected by the ongoing external issues such as tariffs that Donald Trump implemented on imports. As a result, its net income margin plunged to 2.7% from the previous 6.3%, while the automotive operating cash flow fell to $6 billion.

The main reason why the GM stock surged is that the company admitted that it will not be the next Tesla. It now expects to fully focus on the ICE business, which is doing well and which it has a leading market share in the US. The CEO said:

“It’s clear that ICE volumes will remain higher for longer. We lead the industry today, and we are increasingly well-positioned to meet strong, sustained demand.”

GM, like other traditional companies, were quick to pivot to the electric vehicle industry after witnessing Tesla’s robust growth. It launched EVZ brands of its top vehicles, including the Hammer, Bolt, Buick, and Cadillac. It is now cutting over 5,500 jobs in its EV division.

While sales were strong initially, the trend faded as concerns about these vehicles remained. Only Cadillac EVs are doing relatively well, but it is unclear whether the growth will continue.

GM stock price has jumped because of the latest talks between the US and China, which have yielded some major breakthroughs. For example, the company can now operate without worrying substantially about rare earth materials and magnets.

Also, the company may benefit from an improved US-China relationship as it still has a large presence there.

Analysts expect the GM’s revenue will stagnate in the next few years. The average estimate for this year’s revenue is $185.83 billion, down by 0.86% from last year. 

Analysts expect that its revenue will remain at $185.82 billion next year. Its profitability will start improving as it focuses on its most profitable ICE business.

GM stock price technical analysis 

The weekly timeframe chart shows that the GM stock price has done well in the past few months. It has jumped from a low of $25.70 in 2023 to a record high of $70.22. 

GM recently moved above the important resistance level at $64.82, its highest point in January 2022. It also moved above the key resistance level at $60.45, invalidating the forming double-top pattern. 

The stock has remained above the 50-week and 100-week Exponential Moving Averages (EMA). Also, the Relative Strength Index (RSI) has continued pointing upwards. 

Therefore, the most likely scenario is where the GM stock price retreats and retests the support at $64.8. Such a move will be bullish as it will be a sign of a break-and-retest pattern, a common continuation sign. 

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