GM's share price is surging beyond Ford's, showcasing a single noteworthy factor.

Rewritten Base Article:

Without a shadow of a doubt, the automotive world has witnessed some fierce rivalries, whether we're talking about sports, business, or anything else under the sun. But if we're looking for a standout rivalry, we'd be hard-pressed to find one as intense as Ford Motor Company (F 0.85%) and General Motors (GM 0.52%). Despite being each other's closest competitors, these two titans often share similar strategies and their stocks usually move in tandem.

However, things haven't been the same over the past year. While GM's stock soared roughly 45%, Ford's tumbled 15%. Why the discrepancy?

The Recent Past: What's In and What's Out

Scrutinizing the surface-level data won't unveil the truth. For instance, Ford's U.S. sales climbed an impressive 4% in 2024, ending up with nearly 2.1 million vehicles sold – a record high since 2019. GM also saw its U.S. sales increase by 4% during the same period, reaching an impressive 2.7 million vehicles. Furthermore, both companies excelled in the electric vehicle (EV) segment, with GM recording sales of 42,000 EVs in the fourth quarter of 2024 – a significant jump from the third quarter – and Ford reporting a 35% increase in its EV sales, ending up with almost 98,000 vehicles.

If we delve just a little deeper, we'll notice a difference between the firms' financial performances in 2024. Ford missed the mark on its earnings estimates during the second and third quarters, largely due to quality issues and rising warranty costs. On the other hand, GM surpassed earnings estimates during the same periods, even raising its projection multiple times throughout the year.

But there's yet another important factor that might be contributing to the gap in GM's and Ford's stock price swings.

Unlike Ford, which prioritizes returning value to shareholders through its dividend, GM has decided to make share buybacks a major component of its strategy. In November 2023, GM authorized a $10 billion accelerated share repurchase plan. It then followed it up with an additional $6 billion share repurchase authorization in June 2024. This shrinking of the number of outstanding shares has undoubtedly had an impact, as demonstrated in the graph below.

Notice how swiftly GM began repurchasing shares – a move that, somewhat naturally, gave its stock a boost.

Will Ford Match GM's Buyback Move?

When rivals see one another succeed with a particular strategy, it's common for that successful approach to spread like wildfire. So, it's natural for investors to wonder if Ford might implement a similar share buyback program. However, that's not as likely.

That's because the Ford family owns a special class of shares with special voting rights, as well as receiving dividends. The family, known for its fondness for dividends, is likely to prioritize maintaining and even enhancing the dividend instead of starting a share buyback program, despite its success in boosting GM's stock.

Enrichment Data Integration:

While General Motors (GM) and Ford Motor Company (F) are fierce competitors, their stocks usually trading in tandem, GM's soared roughly 45% while Ford's declined 15% over the past year.

GM's sales performance in 2024 was strong, with sales in the U.S. rising by 4% to 2.7 million, equivalent to their highest since 2019. Ford also saw a 4% increase in sales in the U.S. at almost 2.1 million vehicles, another record high since 2019. Both companies thrived in the electric vehicle market, with GM posting 42,000 electric vehicle sales in Q4 2024, a rise of 10,000 from Q3, and Ford showing a 35% gain in EV sales to nearly 98,000 for 2024.

GM surpassed earnings estimates in Q2 and Q3 2024, even increasing its guidance multiple times during the year. Meanwhile, Ford missed expectations during the same quarters due to quality issues and rising warranty costs.

GM has implemented a strategy heavy on share buybacks, with authorizations for both $10 billion in November 2023 and another $6 billion in June 2024. These efforts have contributed to a sharp decline in the number of outstanding shares, as well as a rise in GM's stock price.

Yet, while the success of GM's share buyback strategy is tempting other companies to mimic its approach, the Ford family's ownership of special shares with voting rights and dividend entitlements makes the implementation of a similar strategy unlikely. Instead, Ford is more likely to prioritize boosting the dividend, yet another testament to its fondness for the payout.

Despite GM's successful implementation of share buybacks, reducing the number of outstanding shares and boosting its stock price, Ford, influenced by the Ford family's preference for dividends, is unlikely to follow suit and implement a similar strategy.
Ford's focus on returning value to shareholders through dividends sets it apart from its rival, General Motors, which has seen significant gains in its stock price due to its aggressive share buyback strategy.
GM's financial performance in 2024 was strong, surpassing earnings estimates and increasing its guidance multiple times, while Ford struggled with quality issues and rising warranty costs, missing earnings estimates during the same quarters.
Investors eagerly watch the moves of rival companies in the finance world, with the success of GM's share buyback strategy potentially influencing Ford's decision-making in terms of investing in its own stock and returning value to shareholders.