gm stock soars on ev spinoff
Source: pixabay

GM Stock Soars on EV Unit Spin Off Hopes


Aug. 18 2020, Updated 8:42 a.m. ET

GM stock soared more than 10 percent in intraday trading on Monday and settled with a 7.7 percent gain, which marked its biggest single-day rise since May. The stock jumped after Deutsche Bank outlined how GM spinning off its electric vehicle business could make its shares worth much more than they are today. GM aims to have more than 20 EV models by 2023. 

Article continues below advertisement

What is GM’s stock price today?

GM stock was trading at $30.26 in the pre-market session today, which represents a gain of about 1.0 percent from its closing of $30.01 on Monday.

Article continues below advertisement

During GM’s second-quarter earnings conference call last month, CEO Mary Barra said the company was evaluating different scenarios for its EV business. Without confirming or denying the plan to spin off the EV unit, Barra said that GM was considering everything that would drive long-term shareholder value.

gm spin off ev unit
Source: istock
Article continues below advertisement

According to Deutsche Bank, spinning off GM’s EV unit would unlock significant shareholder value. The bank said that spinning off GM's EV unit into a standalone company would make it easy for the business to access cheap capital to finance its growth. 

Article continues below advertisement

EV makers from established companies like Tesla to startups like Nikola have been drawing huge investor interest lately compared to legacy automakers. For example, EV startup Rivian has already raised $2.5 billion in fresh capital this year to finance its growth. Amazon, BlackRock, and T. Rowe Price Associates are some of the notable Rivian investors.

Spinning off GM’s EV unit will likely unlock its potential and help it attract cheap funding and top talents. Therefore, the bank expects GM stock to soar as investors realize the value in its EV business. 

Article continues below advertisement

What is Tesla’s stock price today?

Tesla stock rose more than 5.0 percent in the pre-market session today and traded above $1,933. The stock gained more than 11 percent on Monday and closed at $1,835.64. Tesla's stock price has risen about 340 percent this year. In contrast, GM stock is down 18 percent for the year. Ford Motor stock is down 25 percent for the year.

Article continues below advertisement

Since Tesla's stock price has soared this year, it will implement a 5-for-1 stock split to make its shares more accessible to small investors. Apple's stock price has also soared this year. The company will implement a 4-for-1 stock split to make its shares more affordable. Tesla and Apple have planned their stock splits for this month. 

Tesla's competitors in the EV business

In addition to GM and Ford, Tesla’s other publicly traded competitors include Nikola and NIO. Shares of Nikola and NIO have risen more than 320 percent and 250 percent this year, respectively, as investors hunt for the next Tesla. 

Tesla also competes with several startups. Besides Rivian, Tesla’s startup rivals include Faraday Future, Fisker, and Byton.


More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.