GM (GM) Keeps Mum on EV Spinoff Rumors

August 17, 2020 5:44 PM EDT
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General Motors (NYSE: GM) shares surged nearly 8% on Monday on speculation the company will ride the red-hot EV wave and spinoff its promising EV assets. In response to questions from about the rumors Monday, GM said they "haven’t announced anything" and "don’t comment on speculation."

While not an entirely new rumor, the idea was highlighted Friday by Deutsche Bank analyst Emmanuel Rosner, who cited recent comments from GM CEO Mary Barra. Rosner again reiterated the idea Monday morning, naming the stock a Short-Term Catalyst Buy Idea.

The comments from Barra that has driven all the speculation was from GM's second-quarter earnings report at the end of July. In response to a question from Mr. Rosner about a potential EV spin, she said they are evaluating many different options and "nothing is off the table,"

"Emmanuel, we are evaluating and always evaluate many different scenarios, so I don't have anything further to say other than we are open to looking at and evaluate anything that we think is going to drive long-term shareholder value. So I would say nothing is off the table."

Rosner believes GM should spin off the assets "now", citing Tesla's (NASDAQ: TSLA) surging market cap and the large valuations fetched by new EV plays like Nikola (NASDAQ: NKLA).

The analyst estimates a GM EV stand-alone entity could fetch a minimum $15-20 billion valuation, with upside potential up to $100 billion. This could value GM at $28-$93 per share.

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