GM could have mortgaged its future final week.
On Wednesday, the automaker introduced that it could increase its dividend and buy back $10 billion worth of its shares, successfully erasing this 12 months’s internet revenue after which some. The transfer happy shareholders, with GM’s inventory buying and selling about 10% larger than earlier than the monetary engineering strikes have been introduced.
However shareholders’ delight could also be fleeting. Earnings from gross sales of fossil gasoline autos are purported to bankroll the transition to electrical autos, GM president Mark Reuss stated final 12 months. That doesn’t seem like the case anymore, partly as a result of the corporate is determined to prop up its share value, which is identical because it was 5 years in the past.
CEO Mary Barra in all probability thinks the market is being unfair provided that the corporate has, except for a couple of quarters, been worthwhile for greater than a decade. The share buybacks are undoubtedly a ploy to wrench GM out of its rut.
Any increase the buybacks give to the share value will solely paper over the doubtless purpose shareholders are lukewarm on GM: The corporate lacks the flexibility to execute on its plans.
