A Peek Into General Motors (GM) Share Buyback History

The Cadillac ATS. Source: Flickr Image.

General Motors has been actively repurchasing its stocks but suspended the buybacks during the COVID-19 disruptions. General Motors resumed the stock buybacks in 2022.

Overall, GM has bought back quite a number of shares over the last several years. The stock buybacks have greatly reduced GM’s number of outstanding shares. GM’s share buybacks also increase the value of the remaining shares and boost shareholder value.

GM’s share repurchases are often used as a way to return cash to shareholders, signal confidence in the company’s future prospects, and improve financial ratios.

That said, this article explores several statistics about General Motors’ share buybacks. The statistics include the number of shares being repurchased and number of outstanding shares.

Apart from that, we also look at GM’s total spending on share buybacks. Let’s take a look!

Investors interested in other statistics about General Motors may find more resources on these pages: GM debt problem, GM R&D vs Tesla, and GM worldwide sales and market share.

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Definitions

To help readers understand the content better, the following terms and glossaries have been provided.

Share Buyback Benefits: A company buys back its shares for several reasons, which can offer various benefits:

1. Increase in Share Value: By reducing the number of outstanding shares, buybacks can increase the value of the remaining shares. This can make the stock more attractive to investors.

2. Improved Financial Ratios: Share repurchases can enhance financial metrics, such as earnings per share (EPS), return on equity (ROE), and return on assets (ROA), making the company look more financially healthy.

3. Returning Cash to Shareholders: Share buybacks are a way to return excess cash to shareholders, similar to dividends. This can be a flexible way to distribute profits, as it doesn’t commit the company to future payments.

4. Signal of Confidence: Buybacks can signal that the company’s management believes the stock is undervalued and has strong future prospects. This can boost investor confidence.

5. Tax Efficiency: For shareholders, buybacks can be more tax-efficient than dividends. This is because capital gains taxes on selling shares can be lower than income taxes on dividends, depending on the investor’s tax situation.

6. Reduction of Takeover Risk: By reducing the number of shares available in the market, buybacks can make it harder for potential acquirers to gain a controlling stake in the company.

These benefits can vary depending on the specific circumstances of the company and the broader market environment.

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Common Stocks Outstanding

GM’s common stock outstanding

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GM’s number of outstanding shares have greatly reduced since fiscal year 2015, as depicted in the chart above. However, there was a slight increase in GM’s number of outstanding shares between 2017 and 2021, driven largely by the suspension of share buyback during the COVID period.

As of fiscal year 2023, GM’s common stock outstanding was estimated at 1.15 billion, a sharp drop from the 1.40 billion share outstanding reported in the previous year.

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Common Stocks Outstanding Growth

gm-common-stock-outstanding-growth-rates

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In fiscal year 2023, GM experienced its most significant drop in outstanding common stocks, with a notable decline of 17%, as depicted in the chart above.

Between 2021 and 2023, GM’s outstanding common stocks declined at an average annual rate of 7%.

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Number Of Shares Repurchased

GM’s stock buyback history

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You can find the benefits of share repurchase here: share buyback benefits.

GM repurchased the highest number of shares in fiscal year 2023, notably amounting to 245 million, as presented in the chart above. However, from fiscal year 2018 to 2021, GM repurchased the fewest shares, with some years showing no share repurchase activity at all.

GM suspended its share buyback in 2021 but resumed the buyback in 2022. In addition to suspending stock buybacks, GM halted its cash dividends in 2021 when the drawdown on one of its credit facilities exceeded a specified amount.

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Cumulative Number Of Shares Repurchased

GM’s cumulative stock buyback

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You can find the benefits of share repurchase here: share buyback benefits.

As of fiscal year 2023, General Motors has repurchased a cumulative total of 614 million shares since fiscal year 2015, as presented in the chart above.

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Spending On Common Stock Repurchase

gm-spending-on-share-buybacks

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You can find the benefits of share repurchase here: share buyback benefits.

GM’s spending on share repurchase has ranged from $100 million to as much as $7.9 billion since 2015. In fiscal year 2023, GM spent $7.9 billion on buybacks, marking the highest amount spent on share repurchases in the past nine years.

However, between fiscal years 2018 and 2021, GM spent the least on share buybacks during a period when its stock prices were at their lowest. GM should have repurchased more of its common stocks during the period when its stock prices were significantly depressed.

In my opinion, GM has poorly timed its stock buyback efforts.

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Cumulative Spending On Common Stock Repurchase

gm-cumulative-spending-on-share-buybacks

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You can find the benefits of share repurchase here: share buyback benefits.

As of fiscal year 2023, GM’s cumulative spending on share buybacks since fiscal year 2015 has reached $21.1 billion.

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Conclusion

In conclusion, GM’s significant repurchase of common stocks has led to a decrease in the number of outstanding shares.

Since fiscal year 2015, GM has repurchased 614 million shares cumulatively and total spending has amounted to $21.1 billion over the last nine years.

However, GM has badly timed its share buyback. GM repurchased its stocks when they were traded at premium prices and reduced its buybacks when share prices were depressed.

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References and Credits

1. All financial figures presented in this article were obtained and referenced from GM’s annual reports which are available in GM SEC Filings.

2. Flickr Images.

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Disclosure

References and examples such as tables, charts, and diagrams are constantly reviewed to avoid errors, but we cannot warrant the full correctness of all content.

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