GM's 'unusual' investor day

[Bikerjulio]

Have to see if any hints surface from this.

General Motors Co. GM, +1.76% is likely to reiterate the need for its restructuring and frame the measures as "necessary to withstand market volatility and to make necessary investments in future technologies," analysts at Morgan Stanley said in a note Tuesday ahead of GM's investor day on Friday. The analysts, led by Adam Jonas, said they also expect management to signal "a strategy that reinforces the need for a separate unit" in regards to GM's Cruise, the company's driverless-car unit, although they said the company is unlikely to be offer specifics. The investor day's timing is "unusual," coming ahead of the Detroit auto show, the analysts said. GM in November announced a sweeping restructuring plan, which includes layoffs, closing plants, and streamlining its vehicle lineup. GM shares rose 1.5% in midday trading Tuesday and are down 21% in the past 12 months.

[John]

Thank you Bikerjulio. I am also thinking it is to announce the selling of their Cruise unit — which I saw somewhere was independent valuated at $14,000,000,000.

[JB]

Other manufacturers will benefit from cruise automation as it has the best autonomous mode technology in the industry.

[meyerweb]

Thank you Bikerjulio. I am also thinking it is to announce the selling of their Cruise unit — which I saw somewhere was independent valuated at $14,000,000,000.

Billion!?!

[John]

That was what I thought I read, but now here’s a correction and a super twist.

My memory was wrong and it was “only” evaluated at $11,000,000,000, as in:

General Motors (GM) sped up its robotaxi plan Thursday, announcing that Japan's Softbank Vision Fund will invest $2.25 billion in GM Cruise in a deal valuing the self-driving unit at $11.5 billion.

. That was on May 31, 2018.

However, six weeks after that RBC valued it at $43,000,000,000, as in:

GM's self-driving car unit could be worth $43 billion — nearly 4 times the valuation it received 6 weeks ago, RBC says (GM)

Graham Rapier
Jul. 10, 2018, 09:42 AM

Alexei Oreskovic

• General Motors' self-driving unit, Cruise, could be worth $43 billion, RBC Capital Markets estimates.
• The autonomous arm received a valuation of $11.5 billion from Japan's SoftBank in May.
• GM is reportedly eyeing a spin-off or tracking stock for Cruise, Bloomberg reported last month.

---

Cruise, the self-driving car company bought by General Motors in 2016, could be worth a whopping $43 billion, RBC Capital Markets estimates.

That new valuation is nearly four times the figure eyed by Japan’s SoftBank when it invested $2.25 billion in the autonomous driving unit in May. Since then, Bloomberg reported that GM was eyeing a possible spin-off or tracking stock for Cruise.

"We doubt SoftBank would have invested if they didn’t see a much larger opportunity," Joseph Spak, RBC’s autos analyst, said in a note to clients Tuesday.

"For now, it appears GM’s plans are to run its own transportation network company (TNC). If they can get the technology right and execute on this plan, then when we run this scenario, we see them having a fleet of ~800,000 vehicles by 2030 driving ~58 billion miles that year. At $0.55/mile and 29% EBIT margins, we see ~$17 billion of EBITDA. In our DCF (11x exit multiple) this values Cruise at $43 billion."

Cruise has been growing at a quick pace ever since GM acquired the San Francisco-based startup and its 50 employees for $581 million. GM hopes to increase Cruise's headcount to 1,648 in California by 2021 thanks to a tax-credit package worth $8 million approved by state officials last year.

RBC says the value add from GM's 80% stake in Cruise is currently worth about $7 a share, which the bank factors into its new $53 price target for the US's largest automaker — 33% above where the stock was set to open Tuesday.

When it comes to the operating a fleet of autonomous taxis, miles driven is a key figure. Cruise's market share of total self-driving miles logged is small, only about half a percent of the global total currently, but RBC says that total is growing exponentially.

"Autonomous driving will rely on machine learning algorithms and deep neural networks (deep learning) to take all the sensor inputs (cameras, lidar, radar, maps, and other sensors) to drive, make decisions and understand location/perception," RBC says. "The more miles the AI takes in, the more it learns. Thus, miles = knowledge."

At the same time, disengagements, or instances where a human driver has to override the car's computer system, have decreased drastically — a good sign for a future commercial rollout.

"Judging how close GM is to a commercial launch is hard, as the company has remained purposefully vague," RBC warned. "Executives have stated that GM’s fleet will be available in 2019 and continue to say that we are a matter of quarters away from launch, not years."

https://markets.businessinsider.com/...8-7-1027355015

[Bikerjulio]

The current market cap of GM is $49B, meaning that there's some seriously wrong valuation on their stock if this pans out. I might buy some GM tomorrow.

The market is not right all of the time. I could bore you all with the story of Bell and Nortel in Canada in the late '90's, but this is looking similar. Hint, Bell the boring old owner of NT was the buy.

FWIW Tesla's current market cap is $58B.

[Frenzy36]

Yep, If you would like to get in on the Uber and Lyft before the IPO -- GM is the way to go.

[Bikerjulio]

As I'm now a part-owner of GM I expect them to keep me informed of all future developments, which I will consider revealing here.

[John]

I hope Mary B calls you today with all the inside news. And you then share the production version pictures with us.

[LightningBolt]

Other manufacturers will benefit from cruise automation as it has the best autonomous mode technology in the industry.

I wasn't following that closely and just assumed Tesla was best (as they probably receive the most publicity). Consumer reports performed their first ever ranking of autonomous mode driving systems and ranked Cruise #1 ahead of Tesla at #2.

[John]

GM stock upgraded this week.

GM Stock Upgraded Over Cruise, Restructuring Efforts

• BY ALEX LUFT
• — JAN 8, 2019

On Monday, BMO Capital Markets upgraded GM stock to an outperform rating, from market. The investment arm also increased the price target of GM stock from $38 to $41 per share. The moves signal to investors that they should buy GM stock.

Analyst Richard Carlson made the change to due two factors: the opportunity behind the GM Cruise autonomous vehicles division as well as GM’s ongoing restructuring of its core business.

“We expect a brighter spotlight to be placed on GM Cruise in 2019, leading to a more appropriate value for this business being priced into the shares,” said the analyst. “We believe restructuring efforts will drive better profitability and [free cash flow], as well as improve cyclical resilience”, he added. Cruise

The GM Cruise division is actively working on a robotaxi service that it plans to launch in the near- to medium-term future.

GM Cruise Leadership – Dan Kan, Kyle Vogt, Dan Ammann

GM acquired Cruise in 2016 to leap ahead of other rivals, including new startups and traditional automakers, in the race to bring self-driving cars to market. In November, GM announced that its then-president, Dan Ammann, would take over as Cruise CEO starting January.

“We believe a key catalyst for GM shares in 2019 could be an increased valuation for GM Cruise being priced into the stock,” said Carlson. Restructuring

Carlson added that the ongoing restructuring of GM’s core business operations should also help its shares climb after a disappointing 2018, during which time GM stock values fell over 18 percent.


GM Cruise AV prototype based on the Chevrolet Bolt EV

In November, GM announced plans to halt production at five plants and cut more than 14,000 jobs.

“Within the core business, we expect restructuring initiatives to drive higher profit margins and free cash generation, while also improving cyclical resilience, which should also drive a higher multiple,” he said.

GM stock rose 1.4 percent on the news on Monday, closing the day at $34.37. It then spiked to $35.64 in morning trading on Tuesday before closing the day at $34.81 per share.

Read more: http://gmauthority.com/blog/2019/01/...#ixzz5c8TEV8cG

[meyerweb]

The current market cap of GM is $49B, meaning that there's some seriously wrong valuation on their stock if this pans out. I might buy some GM tomorrow.

The market is not right all of the time. I could bore you all with the story of Bell and Nortel in Canada in the late '90's, but this is looking similar. Hint, Bell the boring old owner of NT was the buy.

FWIW Tesla's current market cap is $58B.

I worked for a company in the U.S. that Nortel bought. Ran that one into the ground, too. At least I had some stock options that panned out.

[Bikerjulio]

I hope Mary B calls you today with all the inside news. And you then share the production version pictures with us.

Feeling good about this morning's stock purchase, I bought some more after lunch. So, my next step is to seek a seat on the board and a full briefing. Mary sent me a nice welcome note and a voucher for a Bolt lunch bag.