General Motors' board approved a $20 billion stock buyback on Tuesday, Oct. 20. GM can use it any time. The stock fell 6.8% that day, to $77.09. Investors had wanted a higher profit forecast. GM narrowed it instead and warned that 2027 looks bumpy. A buyback, a company buying its own stock, shrinks the number of shares. It doesn't shrink the price of copper.
Sharon Terlep tells the story in Wednesday's Journal. GM has bought back nearly $30 billion of stock in five years and nearly $43 billion in a decade. That cut its share count by 45%. It just finished a $6 billion buyback announced in January. Over the past year the shares gained more than 40%. In 2026, though, they've gone almost nowhere and trail the S&P 500. GM's price-to-earnings ratio, the share price divided by a year's profit per share, is lower than Ford's (F). CEO Mary Barra, 12 years in the job, calls the shares undervalued.
The quarter itself was good. Profit was $3.34 billion, or $3.73 a share, up from $1.33 billion a year earlier. Revenue rose 2.9% to $50.02 billion even though GM sold 5.5% fewer vehicles. That's the plan. GM sells fewer vehicles at higher prices and resists discounts. It's spending billions to build more big trucks, SUVs, V-8 engines and high-end Cadillacs. It's betting Americans keep paying up for them even with gas prices high.
Where the bumps come from
Costs are the problem, and a box by Kelly Cloonan lays them out. GM executives blamed the war in Iran for higher commodity and shipping costs, with copper at a record and steel elevated. GM now expects a $2 billion hit this year from commodity inflation, logistics and memory chips. Those chips are DRAM, the kind Micron (MU, held at weight in 23 books) sells. It expects another $1 billion to $1.5 billion for software, supply chains and moving production to the U.S. GM narrowed its profit outlook after raising it twice. "There are clear external headwinds, and in some cases, they are intensifying," Barra said.
GM is also launching new pickups, a complex and risky job. It planned an update this week on eyes-off, hands-free driving, which it aims to bring to market in 2028. Barra says the spending "has gotta generate a return, because this is our owners' money." The stock closed Thursday, Oct. 22 at $77.21.
Our read
This is an Investments/Risk IN04 story. GM isn't in any of our books. Our read is that a buyback is a tool, and this week's 6.8% drop shows its limits. GM has cut its share count by 45% in ten years. The stock still trails the index this year. A buyback gives each remaining share a bigger slice of the pie. It doesn't bake a bigger pie. Right now copper, steel, shipping and memory chips are eating into that pie, and they all cost more. We'd rather watch GM prove that 2027 is only bumpy. Our verdict is watch.
Here's the connection to your own money. If you own a stock partly because it buys back shares, GM's week is about that stock too. This week, look up two numbers for it over ten years, the share count and the share price. If the count fell a lot and the price barely moved, the buyback isn't doing the job alone. The business has to grow too, and rising costs can cancel out a buyback, as GM just showed. Bring both numbers to a review and we'll read them with you.