More tech layoffs hit today, but not necessarily at a tech firm. This time, the layoffs landed at legacy automaker General Motors (GM), where employees in the software and services division were shown the door. Investors, however, were all right with this development and sent shares up fractionally in Monday afternoon’s trading. The job cuts amounted to about 1,000 employees, and reports note it was a “…partial reversal of a hiring binge in recent years.”
The bulk of the layoffs—about 600—will occur around the Detroit headquarters and come shortly after GM revamped its software and services divisions.
Interestingly, that original revamp came as automakers grew increasingly interested in offering services as part of their vehicle lineup, leaving us with cars that needed to be updated in much the same way smartphones are. However, the costs of such development are apparently starting to catch up with it, especially as sales are visibly dropping. In fact, back in February, a report from Money noted that inventory was on the rise sufficiently that dealerships were lowering prices.
Not Out of the Sustainability Race Yet
Meanwhile, GM’s plans to bring out cleaner vehicles have not stopped, though it has slowed significantly in recent months. Nevertheless, reports noted that NorthStar Clean Energy will now be supplying power to three GM assembly plants. The 15-year deal represents the single largest such purchase GM has ever made.
GM’s goal to be completely carbon-neutral by 2040 remains, even if it has pushed back a few other goalposts. The NorthStar deal is said to bring GM one step closer to achieving that particular win, which is currently running about five years ahead of schedule. Originally, the plan was to make all U.S. GM sites powered by renewable electricity by 2030. Now, it is on track to do that by 2025 instead.
Is GM a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on GM stock based on 11 Buys, two Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 38.36% rally in its share price over the past year, the average GM price target of $57.50 per share implies 26.04% upside potential.
