1 Reason Why GM Stock Is Soaring Above Rival Ford

Source The Motley Fool

Of all the great rivalries throughout time, whether it be sports or business, or something else, you'd be hard pressed to find as great a rivalry as Ford Motor Company (NYSE: F) and General Motors (NYSE: GM). While the two are fierce competitors, they often have similar strategies, and their stocks often trade together.

That hasn't been the case over the past year, with GM rising roughly 45% while Ford declined 15%. What gives?

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

What have you done for me lately

Scratching at the surface of the question won't give you any answers. For instance, Ford's total U.S. sales increased 4% during 2024, compared to the prior year, to nearly 2.1 million vehicles. General Motors also posted a 4% sales gain in the U.S. for 2.7 million vehicles -- both posting their highest total since 2019.

Both even excelled with electric vehicle (EV) sales, the hot topic of late. GM posted sales of 42,000 electric vehicles during the fourth quarter. That result was up 10,000 vehicles from the third quarter, and almost twice that of the second quarter. Ford also posted a healthy 35% gain in EV sales to nearly 98,000 vehicles in 2024.

If you dig a little deeper, there's definitely a difference in the automakers' financial performance during 2024. Ford missed earnings estimates during the second and third quarters, largely blamed on quality issues and rising warranty costs, while General Motors topped earnings estimates in those same quarters while also raising its guidance multiple times throughout the year.

But there's another big difference between the two, and it could be a large driving force behind the gap in General Motors' and Ford's stock price swings.

Share buybacks

Unlike Ford, which prefers to return value to shareholders through its dividend, General Motors has made share buybacks a big part of its strategy. In fact, in November 2023 the company authorized a $10 billion accelerated share repurchase plan. It then followed that up with a separate $6 billion share repurchase authorization in June 2024. You can see the impact that's had in the graph below, with GM's shares outstanding in sharp decline.

GM Shares Outstanding Chart

GM Shares Outstanding data by YCharts

In the next graphic, you can see that as abruptly as GM began repurchasing shares, its stock began to take off. That's to be expected to some degree as earnings are distributed to fewer shares, thus pushing up the earnings-per-share value.

GM Chart

GM data by YCharts

Can investors expect a Ford buyback?

When competitors see their rival have success with a strategy, it's likely to be copied to some extent. Investors might ask themselves if Ford could start a share buyback program to the extent GM has, but shouldn't count on it. That's because the Ford family owns a special class of shares that hold special voting rights, but also receive dividends -- it's well known the Ford family loves its dividends.

For that reason, it's unlikely that Ford will implement a share buyback program even with the success GM seems to be having with its strategy. Ford would be more apt to put money into the dividend that benefits the Ford family, as well as investors, rather than put money into a share repurchase program.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $363,385!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $45,870!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $474,140!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of January 6, 2025

Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Swiss exports crash 36% in the first month of Trump tariffsSwiss exports dropped by 36% in the first month after Trump imposed tariffs.
Author  Cryptopolitan
7 hours ago
Swiss exports dropped by 36% in the first month after Trump imposed tariffs.
placeholder
EUR/JPY appreciates above 163.00 with the Yen retreating across the boardThe Euro is trading higher for the second consecutive day, still fuelled by the delay of Trump’s deadline to avoid 50% tariffs in the US, while the Yen declines alongside super long-term Japanese yields.
Author  FXStreet
7 hours ago
The Euro is trading higher for the second consecutive day, still fuelled by the delay of Trump’s deadline to avoid 50% tariffs in the US, while the Yen declines alongside super long-term Japanese yields.
placeholder
Gold extends correction amidst trade optimism, stronger US DollarGold (XAU/USD) price extends correction, sliding below the $3,300 mark at the time of writing on Tuesday amid improving risk-on mood and a stronger US Dollar (USD). 
Author  FXStreet
7 hours ago
Gold (XAU/USD) price extends correction, sliding below the $3,300 mark at the time of writing on Tuesday amid improving risk-on mood and a stronger US Dollar (USD). 
placeholder
Bitcoin (BTC) To Continue Price Discovery Rally If It Holds These Levels – AnalystAs Bitcoin (BTC) attempts to turn the $110,000 resistance into support, some analysts believe its price discovery rally has just started, forecasting new highs for the flagship crypto.
Author  NewsBTC
7 hours ago
As Bitcoin (BTC) attempts to turn the $110,000 resistance into support, some analysts believe its price discovery rally has just started, forecasting new highs for the flagship crypto.
placeholder
Forex Today: US Dollar rebounds after long weekend, focus shifts to mid-tier US dataThe US Dollar (USD) benefits from the improving risk mood early Tuesday, while trading conditions normalize following a three-day weekend in the US.
Author  FXStreet
8 hours ago
The US Dollar (USD) benefits from the improving risk mood early Tuesday, while trading conditions normalize following a three-day weekend in the US.
goTop
quote