General Motors sets sights on US$10b stock buyback

The news: General Motors plans to return USD10 billion ($15.1 billion) to shareholders via a share buyback program in efforts to calm investor concerns about the carmaker’s health.

The numbers: GM’s stock price hit a three-year low in early November, but jumped 8% on opening following announcement of the share buyback. It expects to see a full-year operating profit between USD11.7 billion and USD12.7 billion, a year-on-year decrease due to a six-week strike that wiped USD1.1 billion from Q3 and Q4 profits.

GM also reinstated its full year 2023 earnings guidance and announced a 33% increase in its recurring quarterly stock dividend, from 9 cents per share to 12 cents, starting with the January 2024 declaration.

The context: CEO Mary Barra wants to steer focus away from GM’s beleaguered efforts to make good on their electric vehicle pivot, by doubling down on its core internal combustion engine manufacturing roots. The company will fund the share buyback by freeing up capital that had been allocated to developing electric and autonomous vehicles.