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General Motors Set to Report Earnings: What Wall Street Expects

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General Motors Set to Report Strong Second-Quarter Earnings

Expectations for General Motors

General Motors (GM) is set to report its second-quarter earnings before the bell on Tuesday. The Detroit automaker is expected to report solid results, with adjusted earnings per share estimated at $1.85 and revenue at $42.64 billion. These results would mark significant year-over-year increases of approximately 62% in adjusted EPS and 19% in revenue.

Potential Guidance Update

Some Wall Street analysts believe that GM could raise its guidance for a second time this year due to stronger-than-expected sales and vehicle pricing for the second quarter. However, the company may remain conservative in its guidance due to potential challenges in the second half of the year, including softening prices and contract negotiations with the United Auto Workers union.

Previous Guidance and Updates

GM previously issued 2023 forecasts of adjusted earnings between $11 billion and $13 billion, or $6.35 to $7.35 a share, and adjusted automotive free cash flow between $5.5 billion and $7.5 billion. Net income is expected to be $8.4 billion to $9.9 billion. When reporting its first-quarter results in April, the automaker increased its adjusted earnings guidance and free cash flow but lowered its forecasted net income due to $875 million in special charges related to an employee buyout program.

Investor Focus

In addition to earnings, investors will be eager to hear updates regarding GM's new electric vehicles for the remainder of the year, including all-electric versions of the Chevrolet Blazer and Equinox crossovers and Silverado pickup truck. The company is also set to reveal an all-electric version of its flagship Cadillac Escalade SUV. Furthermore, investors will be paying close attention to any information regarding the challenging contract negotiations with the UAW, as these negotiations are expected to be among the most contentious in recent memory.

Contract Negotiations and Previous Strike

The negotiations between GM and the UAW formally kicked off earlier this month, and expectations are high for difficult discussions. In 2019, negotiations between GM and the UAW broke down, leading to a 40-day national strike against the company, which cost GM approximately $3.6 billion. The current contracts are set to expire on September 14 and cover approximately 150,000 UAW members who work for the automakers. In conclusion, General Motors is expected to report strong second-quarter earnings driven by favorable industry trends. The company may update its guidance, and investors will be interested in hearing updates on the company's electric vehicle plans and the progress of contract negotiations with the UAW.

Conclusion: Implications for New Businesses

General Motors' strong second-quarter earnings and potential guidance update signify positive industry trends, making it an important topic for new businesses to consider. Here's a "hot take" on how this development may impact new businesses: 1. Collaboration Opportunities: As General Motors continues to invest in electric vehicles and expand its product lineup, there may be opportunities for partnership or collaboration with new businesses in the automotive and electric vehicle sectors. Startups specializing in electric vehicle components, charging infrastructure, or software solutions could potentially benefit from aligning their products or services with GM's future offerings. 2. Market Signal: General Motors' impressive earnings and growth reflect a consumer shift towards electric vehicles and increased demand for certain vehicle models. This presents an opportunity for new businesses to identify market trends and tailor their products or services to meet evolving consumer preferences. By aligning with emerging trends, new businesses can position themselves for success in a rapidly changing automotive landscape. 3. Labor Relations Awareness: With contract negotiations between GM and the United Auto Workers making headlines, new businesses should closely observe labor relations dynamics in the industry. Understanding the impact of labor disputes on large corporations can help new businesses navigate their own labor relations and potentially avoid disruptions or conflicts. 4. Competitive Analysis: GM's performance can provide insights into the competitive landscape of the automotive industry. New businesses can assess GM's strategies, product offerings, and financial success to benchmark against established players and identify opportunities for differentiation or innovation. In conclusion, General Motors' strong second-quarter earnings announcement presents opportunities and insights for new businesses. By closely monitoring industry trends, consumer demands, and competitive dynamics, new businesses can position themselves strategically and align their offerings with evolving market needs. Additionally, keeping a pulse on labor relations can help new businesses understand the broader industry context and proactively manage their own workforce relationships. Article First Published at: https://www.cnbc.com/2023/07/25/general-motors-gm-earnings-q2-2023.html

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