General Motors

General Motors Nears All-Time High

General Motors Co. (GM) rallied within five cents of 2017’s all-time high at 46.76 on Tuesday, at the tail end of a spectacular uptrend off March 2020’s all-time low at 14.32. The uptick translates into a 325% advance in the middle of a pandemic that’s threatened to upend the world economy. GM CEO Mary Barra can thank Elon Musk for a good part of the upside, with Tesla Inc.’s (TSLA) historic uptrend setting off sympathetic rallies throughout the EV space.

GM Raises EV Commitment

The automotive giant is increasing its financial commitment to EVs from $25 billion to $27 billion and expects to offer 30 all-electric models globally by the middle of the decade. Barra also chose to stick with a winner this week, abandoning President Trump’s lawsuit to challenge California emission standards and throwing her hat into Joe Biden’s ring, with a commitment to adhere to more climate-sensitive policies.

Executive VP Doug Parks outlined the initiatives at a Nov. 19 conference, confirming 30 EVs at all price points, with more than two-thirds available in North America. To complete the task, the company is hiring 3,000 electrical system, infotainment software, and controls engineers, plus developers for Java, Android, iOS, and other platforms. GM will also look at third-party licensing for its Ultium EV architecture, batteries, and propulsion systems, along with its Hydrotec fuel cell technology developed with Honda.

Wall Street And Technical Outlook

Wall Street consensus has tracked the rise in share prices, with a ‘Strong Buy’ rating based upon 11 ‘Buy’ and 1 ‘Hold’ recommendation. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets range from a low of $20 to a Street-high $65 while the stock opened Wednesday’s session at the median $45 target. This placement suggests GM is fully-valued, with earnings likely to drive future price action rather than long-term initiatives.

This is General Motor’s fourth trip into this price zone since coming public in 2010. Heavy selling pressure emerged during 2011, 2013 and 2017 advances so it’s best to remain skeptical because the rally has now reached 2017 resistance. In addition, the 8-month uptrend has carved just one consolidation pattern, with support now centered in the mid-30s. As a result, the reward-to-risk profile won’t be favorable until overbought technical readings work out of the system.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.