By Kalea Hall
DETROIT (Reuters) -General Motors earnings exceeded Wall Street's forecasts on Tuesday, but investors still dumped the stock broadly on fears of tariffs that will make it hard for the automaker to hit its 2025 targets.
Shares dropped 8.9% on Tuesday to $50.04 a share, as investors and analysts said GM's outlook is clouded by President Donald Trump's threats of tariffs and reduced support for electric vehicles.
Trump on Monday evening again threatened tariffs on a broad array of goods, including steel, aluminum and copper, all materials critical to building automobiles. He has also threatened heavy levies on allies Mexico and Canada, which are key to the U.S. automotive supply chain.
The automaker projected net income of $11.2 billion to $12.5 billion for 2025. That's ahead of expectations for $10.8 billion as calculated by LSEG, and numerous analysts termed that outlook optimistic.
"There's just a lot of uncertainty between tariffs as well as the rules and regulations around EVs and tax incentives. With that uncertainty, that really isn't baked into GM's guidance at this point," said Jeff Windau, financial analyst at Edward Jones.
GM CEO Mary Barra told investors on a conference call Tuesday that she believes Trump "wants to use policy and regulations in ways that will strengthen not harm domestic manufacturers like GM." Trump has said he wants to use tariffs to push companies to move operations back to the United States - but such moves can take years.
In the meantime, GM has an "extensive playbook" pulled together in the event tariffs are imposed, GM's CFO Paul Jacobson told reporters on Monday prior to Trump's statements. The company had already started to bring vehicles in its international inventory in Mexico and Canada to the United States, Jacobson said.
"Every delivery that we can make before a tariff is instituted, it's that much better, rather than sitting on inventory," he said.
He did say, however, that they would not be able to make some decisions until they understand what the tariff environment will look like. "There's things that we can do to balance plants, etc, and then there are things that cost a lot more money going forward," he said.
GM's fourth-quarter revenue of $47.7 billion surpassed analyst expectations of $43.9 billion. Adjusted earnings per share of $1.92 also exceeded analyst forecasts of $1.89 per share.
It earlier had said it sold 2.7 million vehicles for the year, up 4% from 2023.