Date: November 30, 2022
General Motors stock is trading at roughly 5 times its PE ratio. This valuation is in-line with other traditional automotive stocks such as Honda, Toyota and Ford. However, when compared to Tesla, which is trading at a PE ratio multiple of more than 80, and this valuation seems rather unfair.
In my viewpoint, GM today is taking some major steps that, similar to Tesla, will allow it to be valued more like a tech company.
Now we all know how GM is positioning itself to become a major player in the electric vehicle segment, so I won’t bore you with those details. But, here are two additional evidences, beyond going electric, that suggest GM is transforming into a Tech company.
Evidence-1: Cruise
GM has been incubating companies for a while and Cruise is one classic example of something amazing that GM has build. With autonomous driving, Cruise puts GM at par with leading tech companies such as Alphabet and Tesla.
In addition to extending autonomous driving capabilities to GM brand vehicles, Cruise could provide GM with endless monetization opportunities within the self-driving space.
Evidence-2: BrightDrop
Brightdrop is another incubation project that GM has taken on that can potentially transform GM to be the key supplier and service provider for Last Mile Delivery. This sector is expected to grow into a 123 billion dollar industry by 2030, giving GM another great source to beef up its revenue and monetization base.
Let me know your perspective on the subject by commenting on the above video!
