GM could soar 50% as the auto maker trades more like a tech company in coming years, Wedbush says
- GM shares could pop up by about 50% over the next 12 months,
- Investors may start seeing GM more as a play on disruptive technology and less of a traditional auto maker.
- Analyst Dan Ives set a 12-month price target of $85 per share.
General Motors shares could jump by nearly 50% over the next year as the automaker's plans for producing more electric vehicles sets the stock on course to trade as disruptive tech play, according to Wedbush.
The assessment comes as the company behind the Chevrolet, Buick and AMC brands in June pledged to increase investment to $35 billion toward research and development for electric vehicles through 2025.
"With [GM CEO Mary] Barra & Co. developing game-changing battery technology under the Ultium Platform, GM is in a great position to take advantage of a $5 trillion market emerging over the next decade. By leveraging this technology, the legacy auto will be able to eat up market share against pure-play EVs in all aspects of the industry," said Wedbush analyst Dan Ives in a note published Thursday initiating coverage of GM with an outperform rating.
He set a 12-month price target of $85 from Tuesday's close at $57.46, representing a possible climb of 48% in the stock. Shares during Friday's session bounced up by more than 4% to trade above $58 each.
"We believe as GM proves out its EV vision over the coming years the stock will be re-rated more as a disruptive technology and EV play, rather than its traditional auto valuation," said Ives.
2021 is setting up as an inflection point for GM as it works on delivering at least 20 new EV models within the next two years and 30 in the next three, that analyst said.
Meanwhile, the "software and services business attached to the EV shift, as autonomous/assisted driving capabilities and battery technology improves, represents a potential gold mine for the company bringing in $20 billion to $30 billion of incremental services and software we see over the next 5-7 years," he said.
US consumers have nearly 20 electric vehicles to choose from for purchase and more than 10 new models will go on sale by the end of 2021.
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