5 Reasons GM’s Stock Could Shake Tesla’s In 2021
Those who’ve been following General Motors’ history can remember that in 2009, it faced the largest bankruptcy, with liabilities going as high as $170 billion. Just two months later, the company emerged and quickly released a fresh Initial Public Offering in 2010.
Unfortunately, it came to the markets just after Tesla, an EV manufacturer, listed its shares. Since then, many investors and top brokers were drawn more to Tesla than to GM.
Since 2021 began, GM’s share price has risen by roughly 50%, compared to the over 200% rise by S&P 500. Tesla, on the other hand, delivered a 15,000% gain in the same period, when adjusted for the recent split. On top of that, Tesla’s capitation is 10 times more than GM’s.
From these figures, many top international brokers may dismiss GM stocks. However, focusing on GM alone reveals some major gains that might shake Tesla.
Even if GM doesn’t gain as much as Tesla, the year 2021 looks promising to GM and may witness a great bump in its share prices.
Here are the reasons GM may give Tesla a run for its money.
- Cruise Partnership with Microsoft
This is perhaps the major reason GM stock has gained massively to the extent of threatening Tesla’s shares. GM coming together with Microsoft, a tech giant, is something that has drawn the interest of online investors and the top online stock brokers.
Specifically, GM’s Cruise project (autonomous vehicle) is what brought in Microsoft, which is now part of the $2 billion round of funding. Microsoft will provide cloud computing expertise, hardware, and software for this project.
No matter how this partnership is going to affect the stock market, many investors believe it is putting GM a notch higher than its competitors.
2. Recent momentum
You may not believe it, but top stock brokerage firms report that GM has shown remarkable gains in the last one or two years. We are not yet far into 2021, but its share price has already risen by over 50% compared to 2020 and is almost three times as high as it was in March 2020.
GM’s stock doesn’t show any sign of losing momentum. In the last 30 days alone, its share price has risen by an impressive 35%. Though lower than Tesla’s figures, they are higher than S&P 500’s performance in the same period.
3. Valuation
Experts believe that Wall Street overvalued Tesla’s stock while portraying GM as a dull auto manufacturer. This is the secret that many investors are already exploiting. There’s no way an automaker that sells more than 2.5 million units every year in North America can be dull. GM has a big potential that’s not even visible to some top online stock brokers.
4. Electric Vehicle evolution
The first GM’s EV, known as the Chevy Volt debuted in 2010. By then, many people believed EVs have no future. For this reason, this EV never performed well in the market, and GM stopped its production. This left GM with no EVs. However, the company is back with a new EV, branded EV600. It is a delivery van with an astounding 400-km range.
This EV has shown there are creative ways of producing EVs without competing with Model 3 or Model S. Top stock brokerage firms are keenly monitoring how this new beast is going to affect the stock market.
5. Truck margins
GM has been performing so well on matters of sales, particularly the sales margins, thanks to its pricey motor vehicle models. In 2020, it sold about 210,000 units (passenger cars), including Impala, Malibu, Corvette, Camaro, and Sonic. All these units were sold under the Chevrolet banner. In the same year, the company sold 850,000 pickup trucks, comprising GMC Sierras and Chevy Silverados.
Apart from the pickups and the trucks, General Motors also sells some SUVs at high margins. Because these pricey vehicles appeal to high-end customers, they are expected to push GM’s share prices up in 2021. This will make it compete favorably with Tesla.
