.September 23, 2024 at 4:25 PM

General Motors (NYSE:GM) saw a 2% drop in shares after Bernstein downgraded the stock to Market-Perform due to concerns about rising earnings challenges and potential capital requirements. Despite a recent 85% climb driven by strong North American performance and shareholder returns, Bernstein reduced its 2025 EPS forecast for GM to $8.23, citing pricing pressures, delays in electric vehicle production, and losses from the Cruise autonomous vehicle division. The firm is cautious ahead of GM’s October Capital Markets Day, fearing updates on electric vehicle and software strategies could lead to additional capital requirements impacting free cash flow.

Bernstein’s caution is fueled by potential challenges from GM’s international business and increased capital expenditure forecasts, which have led to a reduced 2025 FCF estimate of $6 billion. As a result, the firm has lowered its forecast for GM’s shareholder distributions between 2025 and 2027 by 17%, now expecting around $10 billion in distributions during that period. The analysts are wary of the impact these developments could have on GM’s free cash flow and overall financial performance.