General Motors (GM) shares are down about 8.3% today (trading at about $75.79) after the automaker beat third-quarter estimates, raised its cash flow outlook and approved a new $20 billion buyback. A close near that level would be GM’s worst day in 15 months.
The full-year guidance looks steady. The math behind it doesn’t. GM has already booked $12.3 billion of adjusted EBIT through September, so its 2026 range leaves about $2.2 billion to $3.2 billion for the fourth quarter. It just earned $4.1 billion in the third.
What GM’s Guide Says About Q4
GM narrowed its 2026 adjusted EBIT outlook to $14.5 billion to $15.5 billion, from $14 billion to $16 billion. The midpoint stayed at $15 billion, while the adjusted EPS midpoint edged up to $13.25 from $13.
Back out the first nine months and the fourth quarter looks thin:
- Adjusted EBIT of about $2.7 billion at the midpoint, against $2.8 billion a year ago.
- Adjusted EPS of about $2.28 at the midpoint, roughly 9% below last year’s $2.51 (even with fewer shares).
- Adjusted automotive free cash flow between about negative $0.7 billion and positive $0.3 billion, after $5.9 billion in Q3.
Dan Ives of Yorkville Ives & Co. said investors wanted another raise and got “a narrowed range instead”.
How Much of GM the $20 Billion Buys
The new authorization equals about 28% of GM’s roughly $73 billion market value going into Tuesday, and closer to 30% at today’s price. At $77.50, the full amount would cover about 258 million shares.
GM has run this play for three years. Diluted shares fell from 1.47 billion in 2021 to 0.94 billion over the last 12 months, a 36% cut. The new program extends that, but fewer shares only split a quarter that the guide says will be smaller.
Was GM Stock Already Cheap Enough?
GM trades at 5.84x forward normalized earnings, almost exactly its five-year average of 5.80x and well above its 3.84x low in early 2025. At today’s valuation, the authorization would allow repurchases at an ordinary price for GM. Ford (F) traded at 7.13x in late September, so GM still screens cheaper than its closest rival.
Part of the soft fourth quarter was already flagged. In September, CFO Paul Jacobson warned the pickup changeover would cut about 35,000 truck deliveries and leave Q4 seasonally weaker. The newer pressure is cost: GM now expects about $2 billion of commodity inflation, including memory chips, and its International unit earned just $28 million in Q3. Third-quarter cash also had help from payables, which are up about $5.8 billion since December.
Where the Street Stands on GM Stock
Going into Tuesday, the mean analyst target was $104.17, about 26% above Monday’s $82.75 close and about 34% above today’s price. Ratings lean bullish, with 13 buys, 7 outperforms and 4 holds. The lowest target is $75, about 3% below where the stock trades now.
Conclusion
I think Tuesday’s drop prices a weaker Q4 harder than the guide warrants. The implied quarter lands close to last year’s $2.8 billion of adjusted EBIT, and GM’s new multiyear buyback authorization equals roughly 30% of its current market value. The test comes with GM’s 2027 outlook in January.
On Tuesday’s call, Jacobson said 2027 free cash flow could be “pretty consistent, if not a little bit higher” if earnings grow, with GAAP cash flow significantly higher as GM laps most of its EV restructuring payments. If that holds, $77.50 looks cheap. If it slips, the $75 low target is the next line.
Think the market got GM’s fourth quarter wrong? Pull up the same diluted share count, forward P/E and Street targets used here, free on TIKR, and see how the buyback math looks to you. Learn more here.
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