I'm making the seemingly bold prediction that General Motors (GM 2.03%) will reach a $200 stock price by the end of 2030. For this to be an accurate prediction, General Motors' stock would need to rise by 130% from its current level, or by about 18% annually.
Based on the company's guidance, General Motors trades for about seven times forward earnings at the current share price of about $87. And this is despite continued strong results from the automaker, massive buybacks that aren't slowing, and continued expected growth in 2026 and 2027 at a minimum. I'd argue that this should be a $200 stock now, but I certainly see a path to getting there within the next five years.
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What will it take for GM to reach a $200 stock price?
There are several major catalysts that could lift the stock to $200, even if the market continues to give it a single-digit P/E multiple. Just to name a few:
- Based on the current share price, GM's new buyback authorization should lead to an approximately 8% reduction in the outstanding share count this year. If this were to continue through 2030, which there's no reason to believe it won't, GM's share count would decline by about one-third between now and then, which should serve to boost the stock price accordingly.
- GM has right-sized its electric vehicle capacity in response to market changes, but it remains an unprofitable part of the business for now. But in a recent CNBC interview, CEO Mary Barra not only said that she expects EV adoption to gradually move forward, and that the company is seeing few EV adopters go backward and return to internal combustion cars, but that the company should reach EV profitability, even without government incentives, sooner than most experts think.
- GM's software revenue could turn out to be a far bigger catalyst than investors seem to give it credit for. This is revenue from services like OnStar and Super Cruise. Deferred revenue from software and services is expected to grow by an impressive 40% to $7.5 billion this year, and with things like eyes-off self-driving set to roll out within the next few years, this could be just the beginning. And keep in mind that, unlike revenue from vehicle sales, this is high-margin revenue that could have a major impact on the bottom line as it grows.
NYSE: GM
Key Data Points
Of course, there's a lot that could go wrong. The auto industry is highly cyclical, so a recession between now and 2030 could result in a massive decline in sales and profits. However, General Motors proved more resilient than many experts had expected during the pandemic and the 2022 inflation surge, and all signs point to strong growth ahead. I'm predicting that GM's stock price will reach $200 by the end of 2030, and if things go well, this could be just the starting point.
