General Motors Rallies on Beat & Raise Quarter, Using GM Options Trade

automakers this morning all with up arrows. As we can see here. General Motors out with its earnings this morning beat rays. We'll talk about that in a second. But that is the clear winner on the day up 4%. Ford is up two. Tesla which is reporting tomorrow. That's up 4%. Right now. Toyota is up 1.5%. So that comes despite the fact that we of course have new tariff headlines back in action here and back in the focus. But GM still reporting earnings today that were good. And that is the focus of the morning trade. So joining us now for a closer look. And the details of this is Molly. Caitlin good morning Molly. Just run us through this report and the reaction. Good morning Sam. Yes good results here. They raised several of their 2026 forecasts. Looking ahead here they also beat expectations for the second quarter. North America a big contributor to the results that we got today. So let's go through the numbers. Earnings came in at $3.57 a share. That was better than the 320. The street was looking for. Revenue of 48.03 billion was about $1 billion better than the 47 that was expected, also up 1.9% year over year. The company's CFO, Paul Jacobson, said that the first half earnings per share is 25% higher than the first half at any time in the company's history, and also said momentum is palpable. He called the company's stock a bargain at roughly $75 a share. Right now we're at 7850 with this move to the upside up more than 40% than a year ago. He also described consumer demand as resilient. I mentioned North American operations being a big booster here that helped lead the results. They expanded their digital services revenue. They improved their EV losses by between 1 billion to 1 billion and a half dollars this year, compared with 2025. That was a significant driver. Ebit adjusted margins came in at 8.6% in North America. That was up two and one half points from a year ago. They lowered warranty costs. They also increased their operating efficiencies. In addition, GM international, inclusive of the China joint venture, was also profitable. Mary Barra also noted that consistent vehicle pricing and what she called a very attractive lineup of pickup trucks and SUVs contributed to its results. The automaker said that the average vehicle transaction price was about $52,000 during the quarter, as it remains disciplined with its incentives. They said that they have substantially completed material charges involving its pullback from electric vehicles, which included a recorded $10.9 billion in EV related charge since the second half of last year. GM said today that it paid 4.5 billion of the expected 7.2 billion in cash charges related to that EV pullback through the second quarter. Let's talk about that guidance. Though. They raised guidance full year EPS now between 12 and $14 expected, up from previous guidance of 1150 to 1350. They also raised their expectations for adjusted automotive free cash flow to nine and a half to $11.5 billion. That was up from a range of 9 to $11 billion. And automotive operating cash flow for this current quarter was up about 9%. They attributed that guidance change to those vehicle transaction prices remaining consistent, those lower warranty costs, and also those EV losses really pulling back as they wrap up this multibillion dollar pullback in EVs. Sam, they're nearing the end of that. One thing, though, to note they did lower expectations for net income attributable to stockholders to between 8.4 to $9.8 billion. That was from a previous range of 9.9 to 11.4. So a significant drop off there. Also, the second consecutive quarter that they've lowered net income attributable to shareholders, but doesn't seem to be affecting the price action today. We're still up about 3% for GM. Yeah great report. Good reaction up about 50% or so over the last 12 months but still down year to date. So no doubt a nicer reaction we're getting today up 3% right now. Thanks so much, Molly for the details of that report. Let's trade this now. Email with Tim Bigham, option strategist over at pilot AI. Good morning Tim. How would you approach an example trade for GM this morning. Yeah good morning Sam. And look at the stock that is you know having a nice day to say the least so far today. Certainly had a nice beat on both the top and bottom line. As you alluded to raised guidance as well. So I think there's a little more upside on the stock. But starting to run into maybe a little overhead resistance around that 80 to 82 area. So that's why I'm structuring my trade there. So I'm just doing a simple call calendar spread. Trade IV has dropped certainly post earnings as the unknown became owned. So option price is a little bit cheaper. So going out buying the September slightly out of the money 80 calls selling the traditional 80 calls paying right around a buck. Last I looked here. I like the fact that I have a little bit of a term structure edge picking up about a 10% differential on the option I'm buying versus selling. Plus I have three sets of weeklies after September expiration to, you know, or after August expiration, I should say, to hedge to further lower the cost of the Sep if need be. So I think GM certainly looking good here and certainly in comparison to some of these AI names, a little bit less volatile. I think investors will kind of, you know, start to move maybe towards these stocks as we get into the end of summer going forward. All right. It's not summer or the end of it until that shirt is back in the closet though. Tim. Great one. It reminds me of how I'll probably be looking next week when I'm on vacation. All right. A