General Motors GM Stock Drops 7% on Lower Q2 Profit, Heads to $44
General Motors' Q2 report surprised analysts with stronger-than-expected results — but profit dived, dragging the GME stock lower.
Quick overview
- General Motors reported stronger-than-expected Q2 results, but a 35% drop in net income led to a significant decline in stock price.
- The decline in earnings was primarily attributed to trade tariffs on imported auto parts, which impacted profits by an estimated $1.1 billion.
- Despite a 7% increase in U.S. vehicle sales, GM's global earnings were negatively affected by these tariffs, prompting a $4 billion investment to relocate parts of its supply chain to the U.S.
- GM has maintained its full-year profit guidance, indicating confidence in its restructuring strategy despite ongoing trade pressures.
General Motors’ Q2 report surprised analysts with stronger-than-expected results — but profit dived, dragging the GME stock lower.
Trade Headwinds Undermine Positive Q2 Results
General Motors Co. (NYSE: GM) saw its shares fall steeply on Tuesday following the release of its second-quarter earnings before the market opened. Despite exceeding analyst expectations on both revenue and adjusted earnings, GM stock slid over 7% to $49.30 by mid-session and continued to trend lower during regular trading hours.
GM Stock Chart Daily – Falling Below $50
The automaker reported a 35% drop in quarterly net income, landing at $3 billion for Q2 2025. This decline was largely driven by the imposition of trade tariffs on imported auto parts, which impacted earnings by an estimated $1.1 billion during the quarter. Adjusted EPS stood at $2.53, still beating Wall Street forecasts but still lower than the $3.06 posted in the same quarter last year.
Sales Growth Fails to Offset Trade Pressures
Despite a robust 7% increase in U.S. vehicle sales and improved profitability in China, GM’s global earnings were sharply eroded by tariffs targeting foreign-sourced parts, particularly from Mexico and Asia. These new cost pressures have prompted GM to take strategic steps, including a $4 billion investment to relocate portions of its supply chain back to U.S. facilities, so the tariffs are working.
However, management warned that the financial pain will likely continue. The company projects total tariff-related expenses could balloon to between $4 billion and $5 billion for the full year — a major threat to margins despite healthy top-line performance. However, GM plans to abate $1.5B of this by producing parts in the US, and stop exploiting cheap foreign labour.
Stock Down for the Year, Outlook Maintained
Prior to the earnings release, GM’s stock had been hovering near breakeven for 2025, trading above $53. But the latest drop now leaves the automaker down 6.5% year-to-date and on pace for its worst single-day performance since March. Shares touched $49 intraday and are now approaching the next critical technical support near $44.
Despite the significant headwinds, GM has reaffirmed its full-year profit guidance, signaling confidence in its restructuring strategy and operational resilience.
Conclusion: General Motors continues to perform well operationally, but its earnings are now caught in the crosshairs of global trade politics. While investors welcomed the strong sales momentum, the mounting tariff toll has clearly rattled market confidence. With Q3 likely to bring further pressure, the automaker’s ability to swiftly pivot operations domestically may determine whether GM can stay profitable — and competitive — through the rest of the year.
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