Automotive giant General Motors (NYSE:GM) reported a double beat quarter on Oct. 30, 2018, in which earnings smashed expectations on healthy margin improvements. In response, GM stock rallied more than 9% to levels not seen since before the October market sell-off.

Investors have a good reason to celebrate the strong earnings, as margins are tracking impressively higher due to robust pricing growth. If this continues to hold true and volume drops are more than offset by pricing increases, then GM has a solid forward earnings trajectory, which warrants the current $36 price tag for GM stock.

But, further upside will be hard to come by considering secular headwinds. GM’s market share is down. Revenue growth is meager. Deliveries are down. This isn’t an anomaly. It’s a sign of the times. The auto world is undergoing some dramatic shifts, and during those shifts, GM promises to lose market share and see drops in deliveries.

Thus, this is a company with solid pricing and margin growth prospects, but meager overall revenue and volume growth prospects. In other words, there is some good, and some bad, and at $36, the GM stock price seems appropriate. As such, while current levels are sustainable, further gains will be hard to come by.

GM’s Quarter Was Good, But Not Great

In the big picture, General Motors stock popped in response to Q3 numbers not because the numbers were that good, but because the stock was that beaten up heading into the print. Less than five months ago, this was a $45 stock with a 7.5X forward multiple and 3.5% dividend yield. Heading into the Q3 print, General Motors stock was trading just north of $30 with a measly 5.5X forward multiple and sky-high 4.5% dividend yield.

Against a depressed valuation backdrop of that magnitude, GM stock was bound to pop on anything other than bad numbers.

But, General Motors stock investors shouldn’t be fooled. This report wasn’t all good. But before we dive into the negatives, it’s important to acknowledge the positives. The North America business is doing well thanks to new trucks, which are driving decent volumes despite a slowing auto environment. More importantly, they are driving record-high transaction prices, which are in turn driving record high EBIT margins. EV demand is also accelerating; management plans to up Bolt EV production by 20% in Q4 to meet stronger demand, confirming that GM is an early leader in the nascent but booming EV space.

However, despite any positives noted above, General Motors is losing market share everywhere. Volumes are down everywhere, too. The China business isn’t spiraling out of control like at Ford (NYSE:F), but it is dropping by a considerable amount.

Overall, the quarter was mixed. Investors expected the bad, which is why GM stock dropped to $30 before the print. They didn’t expect the good, which is why GM stock popped big in response. For those who picked the bottom perfectly, congratulations. But, for those looking for further upside, I’m not sure you’ll find much here.

General Motors Stock: Secular Headwinds Remain

I could easily see recent momentum pulling General Motors stock back to $40 within the next few months. But, it is tough to see this stock reclaiming $45 highs.

The auto environment is undergoing massive shifts, and those massive shifts present multiple secular headwinds that will bear down on the GM stock price in the weeks and months ahead. First, you have the EV revolution, and while GM has a stake in that revolution with the EV bolt, more robust EV adoption means more competitors and less market share. Thus, GM’s market share should continue to give way to EV companies like Tesla (NASDAQ:TSLA) over the next several years.

Second, the rise of ride-sharing and the at-home economy dilutes the need to own a car. As these trends gain mainstream traction over the next few years, the whole auto market will likely compress, meaning GM will be taking home a smaller portion of a smaller pie.

Third, interest rates are still going up. We have already seen how a few rate hikes have negatively affected big-ticket demand in the auto and housing worlds. More rate hikes will have even more negative impact.

If you put all those headwinds together, it becomes pretty clear that General Motors won’t be able to grow revenues at a sustainable rate over the next several years. Over the past several years, this has been a company with revenues stuck between $140 and $150 billion. The same will be true going forward. Granted, price increases should drive EBIT margins higher.

But, that has also been true over the past several years. Yet, General Motors stock has traded largely sideways since mid-2013.

All in all, GM stock remains a “buy the dip, sell the rally” stock. You want to buy this stock at $30 when the cards are down. You want to sell it when it runs toward $40 on unrealistically optimistic expectations.

Bottom Line on GM Stock

This rally in GM stock can persist in the near term. But, the medium- to long-term outlooks remain slightly bearish due to secular demand headwinds. Until those headwinds fade, this is a stock you want to buy at $30, and sell at $40.

As of this writing, Luke Lango was long TSLA and F.