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General Motors Closes at $33 IPO Price; Morgan Stanley Remains Neutral

Stock Markets Sep 30, 2022 22:52
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By Michael Elkins

Morgan Stanley reiterated an in-line rating and $42.00 price target on General Motors (NYSE:GM) after the automotive company closed at its $33 IPO Price on Thursday. GM’s share price has appreciated 0% over what some analysts believe may have been one of the greatest areas of consumer credit/auto credit tailwinds in history. Over the same time, the S&P 500 has appreciated 209%.

GM and Ford (NYSE:F) have both indicated ambitions to internally fund $50bn-type spending on EVs including vertical integration into battery cell manufacturing. However, analysts are unsure exactly how the companies would come up with the cash.

Morgan Stanley analysts wrote in a note, “We increasingly question where both companies would come up with the cash, particularly in a recession scenario. Just our view, but we don't think GM or Ford will be able to spend anywhere near the amount of cash they have earmarked for EV vertical integration and supply chain... even with the help of the IRA.”

They also suggested that these headwinds may force GM and Ford to undertake some structural change. The analysts wrote, “We think the combination of a potential US recession and a highly 'Tesla-friendly' IRA may be a force vector for possible structural change at GM and Ford.”

Shares of GM are down 0.44% in pre-market trading on Friday.

General Motors Closes at $33 IPO Price; Morgan Stanley Remains Neutral
 

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