GM Drives Past Q1 Earnings Expectations Despite Revenues Falling Short

By Thomas Price Wednesday, May 5, 2021

Following an incredibly difficult year for the automotive industry due to the COVID-19 pandemic, 2021 has brought significant optimism as business appears to be making a comeback. General Motors (GM) seems to be one of the companies to do so with a solid but mixed Q1 earnings report that saw net income explode and total revenues decrease. The mixed report still over-delivered on total earnings, and the car manufacturing company looks to have emerged in the new fiscal year with eyes on a strong recovery. Company stock is up in early, premarket trading as investors expect further business growth down the line.

GM Renaissance Center, Rencen in Detroit - General Motors headquarters.

GM Earnings vs. Expectations

In the Q1 earnings report released by the company, GM generated a total of $32.5 billion in revenue. Compared to the same quarter last year, the figure comes up slightly short, with the prior fiscal year seeing $32.7 billion in revenue. While revenue numbers for the car business may have disappointed some, the largest point of excitement for investors comes from net income.

Despite generating less revenue than Q1 of the 2020 fiscal year, GM posted a net income of $3 billion. In comparison to the just $0.3 billion reported by the company last year, the business exploded at an income margin of 9.3%.

The success of net income in turn translated to success in other areas for GM as the company posted diluted adjusted earnings of $2.25 per share. This figure represents a major improvement from Q1 of last year, where the company only reported earnings of $0.62 per share. Additionally, GM beat out analyst expectations by more than double with the consensus projection only estimating earnings of $1.01 per share.

The success of GM in Q1 can largely be attributed to GM North America, GM China, and GM Financial, which all saw earnings explosions between the 2020 fiscal year and the 2021 fiscal year.

Future Business Outlook and Stock Market Reaction

Alongside the Q1 earnings report, GM provided full-year 2021 guidance that predicts a reliable recovery moving forward. With yearly earnings per share ranging between $4.50 and $5.25, the business expects to see similar results in the following quarters of the fiscal year. The car manufacturing company also expects to see a full-year net income between $6.8 billion and $7.6 billion.

GM has been up in early premarket trading as many investors took the major net income spike as a strong sign that the business has made the necessary adjustments to continue to be successful in the near future. So far, company stock is up by over 3% as share prices surpassed $57.

In a letter to shareholders released alongside the Q1 earnings report, chairman and CEO of the business Mary Barra said, “These strong results demonstrate once again the underlying strength of our business, especially in North America and China, and at GM Financial. We continue to execute our strategy and make significant progress on our transition to an all-electric future with the growth opportunities it creates. The speed and agility of our team are front and center as we move from managing through a pandemic to managing the global semiconductor shortage. This remains a challenging period for the company as we emerge from 2020, but the team continues to demonstrate its ability to manage complex situations.”

About the Author

Headshot of Thomas Price

Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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