General Motors Stock Plummets 8.1% Post-Earnings, UBS Sees Buying Opportunity

General Motors (GM.US) experienced a tumultuous stock price movement following the release of its second-quarter financial report on Tuesday. The company's shares plummeted by 8.1%, prompting UBS to weigh in on the market's reaction. UBS believes that the sell-off was overdone, despite the company's uncertain outlook. The financial institution maintained its "neutral" rating on General Motors, setting a target price of $56 per share.

UBS identified a potential buying opportunity for General Motors stock amidst the market's overreaction. The firm noted that the company's share repurchase program could provide technical support. Additionally, trade agreements between the United States and countries like Korea and Mexico could potentially boost General Motors' stock. However, UBS cautioned that significant positive revisions to the company's earnings forecasts for 2025 and 2026 are unlikely.

General Motors' guidance indicates that its pre-tax profit for the second half of 2025 will be approximately $4.7 billion, meeting market expectations but representing a 28% decline from the first half of the year. The primary reasons for this decline include tariff impacts, reduced sales, and increased expenses related to the development of the next-generation full-size pickup truck. Looking ahead to 2026, tariffs could continue to affect the company's annual performance, although the impact is expected to be less severe than in 2025. UBS anticipates that General Motors' pre-tax profit for 2026 will be close to $12 billion, which is lower than the firm's previous estimates but better than the broader market consensus.

As of the latest update, General Motors' stock price was down 0.45% in pre-market trading, at $52.89 per share. Following the release of the financial report, the stock price experienced significant fluctuations, dropping 8.1% on Tuesday and rebounding 8.7% on Wednesday. The market's reaction to General Motors' financial report highlights the volatility and uncertainty surrounding the company's future prospects. While UBS sees potential in the stock amidst the overreaction, the firm remains cautious about the company's earnings outlook for the coming years.