Warren Buffett of Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) has sold his position in General Motors (NYSE:GM) stock. The news came in Berkshire’s latest 13F filing with the Securities and Exchange Commission (SEC).
Buffett got into GM in 2012. He reported a stake worth $848 million as recently as June.
GM stock rose almost 1% overnight. It opened this morning at $28.02. That’s a market capitalization of $38 billion on estimated 2023 sales of $172 billion.
Everybody Hates GM
GM is often called a “cheap stock,” but it’s really a value trap. Shares are down 16% in 2023, 29% over the last year, and 55% over the last two years.
America’s biggest auto company reported net income of $3 billion, $2.28 per share, during the third quarter, on revenue of $44 billion. However, results have been inconsistent, and the company was late to take on the challenge of electric vehicles (EVs).
As a result, Tesla (NASDAQ:TSLA) is worth about 20 times more. Chinese EV stock Li Auto (NASDAQ:LI) has a higher valuation, at $40 billion, on revenue of just over $10 billion.
GM has tried to adapt. It offers the only mid-market EV on the market, the Chevy Bolt. It has a self-driving car unit called Cruise. Its joint venture with China’s SAIC Motor delivered 10,000 cars in October.
But GM canceled the Bolt in April before bringing it back in July. A test of the Cruise system in San Francisco ended in disaster. The overall GM business in China is hurting.
Investors are also worried about rising labor costs after the United Auto Workers (UAW) strike. A settlement is proving to be a hard sell with workers.
GM Stock: What Happens Next?
If GM wants to be worth more, it needs to take drastic action. Investors have lost patience — even the biggest.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
