(Bloomberg) – Shares of General Motors Co. up to its highest level in almost three months after a Deutsche Bank analyst speculated that the motorist could spin his electric car unit to create more value.
The stock pared a gain of as much as 10.5% in Monday’s trading before closing 7.7% at $ 30.01 a share – the biggest one-day jump since May 18 and its highest close since June 8. That came after Deutsche Bank’s Emmanuel Rosner wrote in a report published Monday that the automaker could be worth as much as $ 93 a share if GM spun its electric car business.
GM has recently been thinking about such a move, Bloomberg reported earlier this month, reiterating an idea that was first mooted two years ago. A spokeswoman declined to comment further, citing comments made by her chief executive, Mary Barra, last month.
Asked about the possibility on a July 31 call in the second quarter, CEO Barra did not dismiss the idea, saying “nothing is off the table,” although the company has said nothing about its preparation on it.
GM plans to sell more than 20 EV models by 2023. That company could be sold for $ 20 billion and could eventually be worth as much as $ 100 billion, Deutsche Bank’s report said. GM’s core business selling gasoline-powered sports cars and pick-up trucks generates cash, but is considered a long-term maturity and is less exciting for investors than the electric car company, it said.
Despite Monday’s share gains, Detroit – based automaker’s share is down 18% so far this year, while the value of all-electric rival Tesla Inc. eight times is from GM. By spinning off its EV business, GM was able to gain the kind of momentum that Tesla enjoyed and a handful of startups that have attracted capital, despite having no cars on the market.
Battery-powered cars have captured the imagination of investors in recent weeks, sent Tesla shares to successful record levels and the value of electric startups such as Nikola Inc., Fisker Inc. and Lordstown Motors Corp. increased. tracking public ads after they have been purchased by special-purchase companies.
(Chart updates; An earlier version of this story was corrected on state shares closing at a nearly three-month high)
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