General Motors’ shares rose monday after a Deutsche Bank analyst said GM left its electric vehicle (EV) business.
As of 1:30 p.m. ET, GM’s stocks rose about 9.9% from Friday’s final price.
In a note released Monday morning, Deutsche Bank analyst Emmanuel Rosner added GM to the bank’s “short-term catalyst call list,” a list of stocks that can increase their value in short-term news. Rosner believes GM can simply be part of its electric vehicle business, creating a separate company (and a stock) that may have a valuation closer to that of Tesla, a potential advantage for GM’s existing shareholders, who would likely get shares in the division. Corporate.
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Rosner had questioned CHIEF Executive Mary Barra about the option of a derived electric vehicle when GM called for effects on July 29. Although Barra has not committed, Rosner argued in a note last week that such consequences would be “evidence” with the prospect of unlocking billions. dollars in shareholder value.
Rosner argued that if a new GM electric vehicle company can be priced at between $15 billion and $95 billion, the legacy business (the rest of GM) would lose a lot of price after the split, as its valuation is already much lower than that. of their purely EV peers.
A similar point: with a valuation higher than GM,, a new GM electric vehicle company would get trouble-free capital (through percentage offers) at a lower charge than GM currently.
Would a split from GM’s electric vehicle business be a no-brainer, offering billions of dollars in “unlocked” prices to automotive investors? I have a tendency to agree with my foolish colleague Adam Levine-Weinberg, who explained earlier in the day why it would not be as undeniable as Rosner argues. Simply put, the electric vehicle industry would be very difficult to separate from GM and its long-standing brands, and GM’s legacy would diminish without electric vehicles.
But what are the chances of benefits occurring, whether undeniable or not? As gm’s longtime observer (and shareholder), this is my conscientious view: don’t hold your breath.
John Rosevear owns shares in General Motors. The Motley Fool owns stocks and recommends Tesla. The Motley Fool has an outreach policy.
The Motley Fool is a USA TODAY content spouse that provides news, analysis and monetary observations designed to help others take control of their monetary lives. Its content is produced independently of USA TODAY.
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