Please ensure Javascript is enabled for purposes of website accessibility

Why General Motors Stock Was Up 22% Last Month

By Jeremy Bowman - Updated Feb 4, 2021 at 8:23AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The automaker gained as it accelerated its push into electric vehicles.

What happened

Shares of General Motors (GM 5.55%) were moving higher last month after the legacy automaker took a number of steps toward embracing a fully electric future, earning some of the attention that investors have showered on EV stocks over the past year.

The stock finished January up 21%, according to data from S&P Global Market Intelligence. As you can see from the chart below, the gains covered most of the month before pulling back toward the end of January.

GM Chart

GM data by YCharts.

So what

The company kicked off January announcing blowout sales for the fourth quarter, with unit sales up 5% year over year in the U.S., and gains in market share in every major category. In China, the company's biggest market, sales grew 14.1% in the quarter. The stock went up 6% in the two days those announcements came out.

Several Cadillacs on the assembly line

Image source: General Motors.

On Jan. 12, the stock jumped again after the company announced the creation of BrightDrop, a new business segment built around an integrated ecosystem of electric vehicles and systems, including cargo vans and electric pallets. The company expects to begin delivering the cargo van, the EV600, by the end of the year.

The following week, the stock got another boost when it said that Microsoft would participate in a $2 billion funding round, along with Honda, in GM's Cruise division, which is now valued at $30 billion.

Toward the end of the month, GM was one of several large-cap stocks that pulled back on the Reddit short squeeze, perhaps as investors cashed out shares to put that money to use elsewhere, and the company also announced plans to go carbon neutral by 2040 and eliminate tailpipe emissions from light-duty vehicles by 2035.

Now what

With those announcements, GM is staking out the pole position among legacy automakers in the EV race. It's a smart move, considering investors have richly rewarded EV makers over the past year (even NIO, the Chinese EV-maker, now has a bigger market cap that GM). With its manufacturing capacity and brand reach, the company has a number of advantages over pure-play EVs, and those shouldn't be overlooked.

Investors should learn more about the push into EVs when the company reports fourth-quarter earnings on Feb. 10. Analysts are expecting revenue to increase 17.2% to $36.1 billion and for earnings per share to jump to $1.66, from $0.05.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
$34.82 (5.55%) $1.83
Microsoft Corporation Stock Quote
Microsoft Corporation
$267.70 (3.42%) $8.84
Honda Motor Co., Ltd. Stock Quote
Honda Motor Co., Ltd.
$25.04 (0.80%) $0.20
Nio Inc. Stock Quote
Nio Inc.
$24.08 (4.47%) $1.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.