General Motors GM shares fell more than 7% in premarket trading Tuesday despite the automaker reporting stronger-than-expected third-quarter earnings and revenue, as investors weighed its updated annual outlook against rising costs and pressure on parts of its business.
The Detroit-based automaker reported adjusted earnings before interest and taxes (EBIT) of $4.1 billion, up 21.6% from a year earlier. Adjusted earnings per share reached $3.70, beating Wall Street’s estimate of $3.63, according to LSEG data.
Revenue increased nearly 3% year over year to $50 billion, exceeding analysts’ consensus forecast of $48.77 billion.
GM updates 2026 guidance
General Motors narrowed its full-year 2026 adjusted EBIT guidance to $14.5 billion-$15.5 billion, compared with the previous range of $14 billion-$16 billion. Its adjusted earnings-per-share forecast was also cut to $12.75-$13.75 from $12.00-$14.00.
GM raised its adjusted automotive free cash flow outlook to $11.5 billion-$12.5 billion, up from $9.5 billion-$11.5 billion previously.
The revisions present a mixed picture for investors. While the midpoint of its adjusted EBIT range remains unchanged, the improved cash flow forecast provides a positive counterpoint to rising expenses.
The company expects commodity inflation of approximately $2 billion, at the upper end of its earlier estimate of $1.5 billion-$2 billion.
The figure includes logistics and dynamic random-access memory (DRAM) chip costs, which have been rising significantly. GM also lowered its expected regulatory benefits to around $500 million from as much as $750 million.
North American margins improve
GM’s North American profit margin increased to 8.7% from 6.2% a year earlier, despite a decline in sales.
The automaker attributed the improvement partly to a higher sales mix of large pickup trucks and fewer electric vehicles during the quarter.
GM has been pulling back on EV sales following the Trump administration’s withdrawal of support for the segment.
CEO Mary Barra said the company was working to sustain its performance despite rising costs.
Letter to shareholders
“GM is performing well, and we are working hard to continue our momentum despite growing inflationary pressures through strategic investments in new products and services, and through improved quality and operating efficiency”
GM also announced a multiyear $20 billion share repurchase program, although it did not specify a timeline for the planned buybacks. The company has repurchased approximately $29.5 billion of its own shares since 2023.
The latest announcement signals a continued commitment to returning capital to shareholders as GM manages costs and adjusts its business strategy.
Investors focus on future earnings
JPMorgan analyst Rajat Gupta had warned before the results that investors would focus on revisions to GM’s 2027 outlook rather than its quarterly performance.
“Investor focus is likely to be on 2027 revisions and we don’t see results driving meaningful upside,” Gupta said.
Despite the earnings beat, investors are assessing whether GM can sustain profitability and cash generation as inflation increases expenses.
Its improved free cash flow outlook and buyback program offer support, but the revised guidance and higher projected costs remain important considerations for shareholders.
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