General Motors announced on Tuesday, June 11, that its board had approved a new $6 billion stock repurchase authorization. According to CNBC, this follows the completion of an accelerated $10 billion share repurchase program initiated in November 2023, expected to conclude by the end of this month.

This decision aims to increase share value, return capital to shareholders, and signal confidence in the company's future prospects. By reducing the number of outstanding shares, GM can enhance the value of remaining shares and improve key financial metrics such as earnings per share (EPS). 

Additionally, the buyback allows the company to efficiently use excess cash to benefit shareholders, particularly given current market conditions and investment opportunities.

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General Motors Profitability

GM CFO Paul Jacobson himself confirmed that the company's current main focus is profitability across its internal combustion engine and electric vehicle businesses. 

By using its financial resources wisely, GM aims to stay profitable in its traditional and electric vehicle businesses, allowing it to return money to shareholders through dividends or stock buybacks. The new authorization will also enable GM to buy back shares as opportunities arise after the current program ends. However, a completion date for the new program has not been set. 

This buyback plan comes amid challenges related to adopting all-electric vehicles, a sector GM has heavily invested in, and a slowdown in customer demand for new vehicles. VCPost earlier reported that the automotive company reported a massive loss in just three months alone in the Chinese market. 

As a response, Jacobson remains confident in the company's strategy and sees itself consistently delivering strong revenue growth and free cash flow in the future.

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