If you’re an investor in the market for some bargain shopping, General Motors (GM) is having a fire sale on Tuesday, Oct. 20, following its third-quarter earnings release.
The Detroit automaker reported third-quarter results that topped estimates, but it also reined in its full-year profit guidance instead of increasing it after the strong quarter, according to Yahoo Finance.
That move was a huge red flag for investors, who sent the stock deep into the red on Oct. 20.
At last check, shares were down more than 4.7% during the morning session. But analysts at BNP Paribas see this decline as a buying opportunity, even though GM missed its own internal earnings guidance for the quarter.
Here’s why they are still bullish on the stock.
Why is GM stock falling?
General Motors beat Wall Street’s consensus top- and bottom-line estimates, so why is it declining?
The firm tightened its EBIT guidance slightly, to between $14.5 billion and $15.5 billion, from its previous earnings view of between $14 billion and $16 billion. It also tightened its earnings per share guidance to between $12.75 per share and $13.75 per share from its previous view of between $12 and $14 per share.
That sent the stock reeling 4.7% to $78.88 per share. This is the second time in the last four weeks the stock has taken a major dip, but it has found support at the $77 per share level. The declines on Oct. 20 did not come close to touching that area of support, however.
GM’s print shows encouraging signs
BNP Paribas analysts had higher expectations for GM than the market’s average consensus did. The firm expected the automaker to report earnings of $3.74 per share versus the market’s consensus estimate of $3.56 per share. Adjusted EBIT of $4.11 billion also fell short of the firm’s $4.26 billion estimate.
GM reported earnings of $3.70 per share. Revenue of $50 billion in the quarter did top BNPP’s estimate by 3.1%.
But despite the bottom-line misses, BNPP is encouraged by two major factors: the $20 billion share buyback authorization and the extra $1.5 billion in free cash flow it expects this year.
Related: GM’s $91,100 Escalade faces new scrutiny over engine failures
“We would be buyers of expected weakness today,” James Picariello, BNP Paribas senior analyst, said. “GM posted a modest 3Q miss (largely tied to lower pricing, reflective of raised incentives on current-gen T1 pickups ahead of 4Q’s next-gen changeover) vs. our forecast & reiterated its full-year EBIT midpoint instead of the expected raise we laid out in our 3Q26 Outlook.
“That said, we are encouraged by this year’s +$1.5B in stronger FCF and announced $20B shareholder repurchase authorization, which underscores its continued commitment to shareholder returns.”
The firm reiterated its outperform rating and $112 price target, which represents a potential 31% upside from the stock’s Oct. 20 opening price.
BNPP says it believes GM’s increased free cash flow is partially driven by “favorable timing” and the fact that it’s spending more than $800 million less this year on restructuring its electric vehicle operations than last year.
GM’s revenue of $50 billion in the quarter topped BNPP’s estimate by 3.1%.Andrew Harnik / Getty Images
What’s next for GM?
One of the reasons investors reacted so negatively to GM’s print is that is has established a pattern of beating expectations, then raising guidance. But it broke with tradition this time by lowering guidance.
The company stated during its earnings call that “the path forward is now more challenging” amid an affordability crisis that has hampered U.S. consumers for months and rising gas prices.
Still, BNPP analysts say they are encouraged by the company’s plan for the future, even if guidance is now lower.
“We remain encouraged by the GM’s commentary for ‘27E adj. EBIT to run stronger vs. ‘26E (BNPP modeling EBIT +$800M), supported by stronger mix from its fully refreshed full-size pickups, reshored CUV capacity, incremental full-size SUV capacity, and continued software & services growth. We believe a new USMCA deal with Mexico/Canada remains a key area of upside to our forecast, representing an estimated +$500M annualized EBIT benefit (vs. its -$1.6B N.A. exposure),” Picariello said.
However, there are potential headwinds to this view as commodity prices, inflation DRAM costs, onshoring production costs, software expenses, and forex headwinds could all potentially derail its growth prospects in the short term.
Related: Top analyst strongly resets General Motors target before earnings