General Motors (NYSE:GM) stock investors are celebrating a slew of positive projections from the company today. For one thing, General Motors just provided optimistic forward guidance for the automaker’s revenue, profit and free cash flow. Plus, General Motors’ management believes that its electric vehicle (EV) business will be profitable in a few years.
General Motors isn’t the old-fashioned, conventional automaker that some folks might assume it is. Indeed, the company is diving headfirst into the vehicle electrification movement. However, some skeptics might wonder how long General Motors will remain underwater on its EV-market investment.
There’s good news on that front, as General Motors anticipates that revenue from its EV sales will exceed $50 billion in 2025. Not only that, but General Motors expects to scale its EV production capacity to more than 1 million units annually.
Furthermore, General Motors’ management projects that the company’s EV portfolio will be “solidly profitable in 2025” in North America. Among the contributing factors will be the Inflation Reduction Act, General Motors asserts, and its incentives to build EVs and batteries in North America.
What’s Happening With GM Stock?
Even while the stock market was in a so-so mood this morning, GM stock rose 3%. Clearly, financial traders approve of General Motors’ timeline for the automaker’s EV rollout.
Yet, there’s more to the story. Investors are also cheering General Motors’ revenue, profit and free cash flow projections. For one thing, the company expects its revenue to increase at a 12% compound annual rate (CAGR) from 2023 to 2025, reaching $225 billion.
Also, General Motors now models free cash flow of up to $11 billion by 2025. The company’s prior guidance had only been $7 billion to $9 billion in free cash flow.
Additionally, General Motors envisions adjusted earnings before interest and taxes (EBIT) of $13.5 billion to $14.5 billion by 2025. This forecast narrows both ends of General Motors’ previous projection by $500 million.
If General Motors is correct about these predictions, then the automaker’s EV-industry investment will turn out to be quite lucrative. With that, GM stock could have a runway to significantly higher price points by 2025.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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