General Motors is getting a huge boost today based on comments by analysts about its ability to pivot to new high-tech electronic vehicle applications.
Tomi Kilgore at MarketWatch reports Wedbush’s Dan Ives calls GM a “disruptor,” citing new initiatives by Mary Barra and crew to isolate and pursue new EV solutions. In fact, Ives goes further, suggesting that these new projects fundamentally change the company from a staid blue-chip auto company to a newfangled tech firm.
Ives’s bestowal of an outperform rating and an $85 dollar price target is part of what is sending GM shares upward today. Part of this assessment reportedly has to do with GM’s Ultium battery work that could move EV battery technology forward in the years to come.
Although GM may be solidly involved in EV-related research and development, so are other major companies. Analysts looking critically at GM’s record against innovators like Tesla may find that some aspects of GM’s past legacy could be hard to shake, as in this conversation between Fool analysts Brian Feroldi, Brian Withers, and Matt Frankel:
“There’s a reason that GM trades for just over 10 times earnings,” says Frankel. “It’s not because people are as optimistic as they are about Tesla. I know I’m in the minority there. Other Brian is being silent, so I’m wondering what he thinks.”
“I’m very similar,” replies Withers. “I watched GM close factories and just the amount of plants that they had in Michigan alone. I remember a story in Fortune and how that’s decimated. They’ve laid off hundreds of thousands of people over the years. I like Mary Barra. I think she’s the right CEO for GM for this time. But yeah, I just can’t get over the capital requirements. I like companies to have recurring revenue, and so it’s hard to say that you’re going to buy a new GM car every month.”
The bottom line is that GM got a bump today, and all known data indicates that the automotive giant is dedicated to getting proactive on electric vehicles. We’ve been reporting on how both primary and secondary plays are blowing up the electric vehicle world and providing major tailwinds for various stocks. Keep an eye on this as one of the major trends in today’s technology sector.
