|Shares Out. (in M):||1,396||P/E||n/a||n/a|
|Market Cap (in $M):||51||P/FCF||n/a||n/a|
|Net Debt (in $M):||0||EBIT||0||0|
|TEV (in $M):||0||TEV/EBIT||n/a||n/a|
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General Motors — JUNE 2025 $60 CALL
We believe that GM is a significantly mispriced stock and a fundamentally misunderstood business, the reality of which will become clear with the fullness of time. We believe GM stock offers a 2.7x return, and the LEAP options offer 20x…
By our reasonable estimates, GM is presently trading at about 3.5x our guess of 2025 EPS. We estimate that the earnings power of GM in a normal environment in 2-3 years should be ~$10.50, and that GM deserves to trade at 10x earnings for a valuation of $100, or 2.5x+ the present price. Importantly, for those shopping for more horse-power the LEAP option calls on the stock are very interesting, with the June 2025 $60’s implying that one’s return (if the shares trade to our target price) should be over 20x… Presently, the "furthest out" one could go is mid-2025, and the highest strike is $60. Aside from the capitalizing on the equity, we believe a key opportunity for GM is in options, which are low-priced because the company is understandably not presently being underwritten for the kind of price-action we are hoping for (a near-triple) over the next ~2 years.
In short, we believe the fundamental features of the GM story are as follows:
We arrive at our number of ~$10.50, as follows:
DISCLAIMER: This is intended for information purposes only (not investment advice) and should not be relied upon solely as a basis for investment. The author may hold a position in the issuer and undertakes no obligation to update any future changes in the position or in the investment opinions expressed herein.
Fundamentally good quality business trading at an "existential-threat multiple" which will wash away in due time, and with the potential for a number very large positive surprises.
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