General Motors CEO Mary Barra tried and failed to convince Wall Street to value her company as a high-growth technology platform instead of a car company shackled to economic and regulatory cycles.
Now, Barra and GM’s board are shifting course. For starters, they have concluded the best way to spend $10 billion sitting in GM’s bank accounts is to buy back the equivalent of a quarter of GM’s market cap.
Think of GM’s “Accelerated Share Repurchase” program as a partial LBO, minus the “L” since the deal will be funded from the company’s bulging cash reserves.
It turns out the United Auto Workers union’s record contract and its $9.3 billion price tag for GM do not come close to emptying the company’s coffers – filled with profits from combustion trucks and SUVs.
Still, investor enthusiasm is muted. GM’s shares on Monday inched above $33 – the price at which GM sold its post-bankruptcy IPO in 2010.
Analysts want Barra to be more specific about how much she intends to spend on the Cruise robo-taxi operation going forward.
Barra and CFO Paul Jacobson told investors last week that GM will reduce capital spending on EVs, and deliver significantly narrower losses on electric vehicles next year. Federal subsidies will help.
Barra’s presentation to investors on the buyback and the cost of the UAW contract is here.
Jacobson’s presentation to the Barclay’s investor conference is here.
Barra is scheduled to answer questions during her annual fireside chat at 5:30 PM EST this afternoon with members of the Detroit Automotive Press Association. A livestream of the event will be here.
However, a detailed explanation of GM’s strategic reboot likely won’t come until the company reports 2023 results, and then holds an investor day in March.
