General Motors shares fell sharply in premarket trading on Tuesday despite the Detroit-based automaker beating Wall Street's third-quarter earnings and revenue estimates, as investors weighed its narrowed full-year guidance against mounting inflationary pressures and higher operating costs.
The stock dropped around 5% in premarket trading after the results were announced. GM shares had closed at $82.75 on Monday, while the premarket price slipped to $79, down 4.53%, according to the figures available.
The key concern for investors was GM's decision to narrow its 2026 earnings outlook rather than raise it more decisively, even as the company reported stronger-than-expected results and improved its free cash flow expectations.
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According to estimates compiled by LSEG, General Motors reported adjusted earnings of $3.70 per share for the third quarter, beating the Wall Street consensus of $3.63. Revenue came in at $50.02 billion, compared with expectations of $48.7 billion.
GM now expects adjusted earnings before interest and taxes (EBIT) of $14.5 billion to $15.5 billion for 2026. Its adjusted earnings per share guidance stands at $12.75 to $13.75.
In July, the automaker had projected adjusted EBIT of $14 billion to $16 billion and adjusted earnings per share of $12 to $14.
The company also raised its adjusted automotive free cash flow outlook to $11.5 billion to $12.5 billion, from its previous range of $9.5 billion to $11.5 billion.
The narrower earnings range comes as the company grapples with rising commodity prices, logistics expenses and higher costs for dynamic random-access memory (DRAM) chips, which are affecting industries beyond automobiles.
GM expects commodity inflation costs to reach around $2 billion, the upper end of its earlier forecast. Warranty expenses are also expected to be at the higher end of the projected $1 billion to $1.5 billion range.
However, gross tariff costs are expected to come in at the lower end of the company's estimated $2.5 billion to $3.5 billion range.
GM announced a new multiyear share repurchase programme worth $20 billion after completing its $6 billion buyback announced in January. The company did not specify a timeline for the latest programme.
The automaker reported net income attributable to stockholders of $3.3 billion for the quarter, up from $1.3 billion a year earlier. North America remained its biggest earnings contributor, generating $3.6 billion of the $4.1 billion in adjusted EBIT reported during the quarter.
In a letter to shareholders, CEO Mary Barra said GM was working to maintain its momentum despite growing inflationary pressures through investments in new products and services, improved quality and greater operating efficiency.
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GM also said costs associated with its previously announced pullback in all-electric vehicles were substantially complete. The company has recorded $11.2 billion in related charges since the second half of last year.
Despite the earnings beat, the narrower outlook and pressure from rising costs appear to have overshadowed the stronger quarterly performance, leaving investors focused on how effectively GM can protect profitability through the remainder of 2026.
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