GM is on track for its worst week since the start of 2025. Should you buy shares on the dip?

Shares of automaker General Motors are falling as the company revises its earnings forecast and management warns of external risks. However, Wall Street analysts view the decline in share prices as a buying opportunity, pointing to the company’s business resilience, improved profitability, and growing cash flows.

At the close of trading on Thursday, GM shares were down 8% for the week. If the decline continues, it will be the steepest since January 2025. On Tuesday, the stock fell 6.8%—the largest single-session drop since July 2025. As of the October 23 trading session, the stock is down 3%.

On Tuesday, the company narrowed its earnings guidance range for 2026, and CEO Mary Barra warned of “clear external headwinds,” referring to rising inflation and the conflict in the Middle East, according to Bloomberg.

That said, some analysts believe the market's reaction was excessive.

"Expectations were high. This is a buying opportunity. Most of the factors that spooked the market are related to the timing of the company's plans, not its earnings potential," said Mickey Legg of StoneX, who recommends buying GM stock.

Analysts at BNP Paribas, Evercore ISI, and RBC Capital Markets agree with him. James Picariello of BNP Paribas reaffirmed his “buy” rating on the automaker’s stock, citing its “extremely low market valuation” and the company’s strong track record in executing its plans, the agency notes.

"The market has been overly focused on short-term obstacles, overlooking the company's improved operating metrics, rising profitability, and increased cash generation," said Ivan Fainset, Chief Investment Officer at Tigress Financial Partners.

None of the analysts tracked by Bloomberg recommend selling GM stock. According to MarketWatch, 21 Wall Street investment firms advise buying it. Six other analysts have taken a neutral stance. The average price target is $103, which implies upside potential of 33.4% relative to Thursday’s closing price.

In July, GM reported quarterly earnings that exceeded expectations and raised its full-year forecast. Following the release of the results, the stock rose and reached a record high. Since then, the stock price has fallen amid high oil prices, rising costs, higher interest rates, and weak consumer sentiment, according to Bloomberg.

On October 20, the company announced a $70 billion buyback program, which, according to the board of directors, was expected to drive the stock price higher. However, in its third-quarter report, the automaker lowered its full-year forecast, which disappointed the market and triggered a sell-off. On average, this figure remained unchanged at $15 billion—GM now expects adjusted earnings in the range of $14.5 billion to $15.5 billion, down from $14 billion to $16 billion.

Since the beginning of 2026, GM's stock has fallen 5.1%, while the S&P 500 index has risen 12%.

This article was AI-translated and verified by a human editor