What Drove GM, Coca-Cola, and Netflix Stocks?

TL;DR

GM shares surged after the automaker raised its full-year guidance and estimated that policy offsets would cover about 35% of tariff costs. Coca-Cola gained after better-than-expected results, although North American volume was flat, while Netflix investors focused on advertising momentum, a strong content slate, and live sports before its third-quarter report.

Transcript

Welcome to Yahoo Finance's flagship show of the morning brief. I'm Julie Hyman. Let's get to the three things you need to know today. First up, earnings are the key focus for investors this morning. US stock futures are a little change amid an onslaught of results that are moving individual stocks, including companies like Dow components 3M and Coc... Read More

Key Insights

• General Motors raised its full-year earnings forecast to between $9.75 and $10.50 per share, while adjusted EBIT could exceed $13 billion. The improved outlook and more optimistic tariff commentary outweighed a slight quarterly revenue miss and helped drive a double-digit premarket stock gain.
• General Motors estimates tariffs will cost $3.5 billion to $4.5 billion during the year. The automaker expects mitigation policies to offset about 35% of those costs, and CEO Mary Barra said the new measures could make GM and other US manufacturers more competitive.
• General Motors achieved an 8% increase in US sales to more than 710,000 vehicles, representing its best market share since 2017. Gas-powered pickup trucks and SUVs drove much of the momentum, while quarterly adjusted earnings and adjusted EBIT exceeded expectations.
• General Motors recorded 66,000 electric vehicle sales but expects demand to slow substantially after federal tax credits expire. The company took a $1.6 billion charge related to reassessing its electric vehicle plans and said near-term adoption would be lower than previously expected.
• Coca-Cola Zero Sugar grew 14% during the quarter, showing strength as consumers sought alternative beverage options. Water and sports drinks also performed well, but North American volume remained flat and global unit volume increased only 1%.
• Coca-Cola identified affordability and product innovation as important responses to softer consumer demand. Management cited unusual weather as a transitory issue, while inflationary pressure, uncertain trade dynamics, and a changing geopolitical environment were presented as potentially longer-lasting challenges.
• Netflix’s third-quarter earnings focus centered on momentum in its advertising business and the strength of its programming. Analysts expected films such as K-pop Demon Hunters and live sports events to support results when the streaming company reported after the market close.
• Aerospace companies benefited from commercial and defense demand alongside declining estimates of tariff damage. GE Aerospace raised its full-year forecast for the second consecutive quarter after third-quarter revenue grew 26%, while RTX also increased its forecast for the second time during the year.

Questions & Answers

Q: Why did General Motors stock rise after earnings?

General Motors shares rose by more than 10% in premarket trading because investors focused on improved full-year guidance and more optimistic comments about tariffs. GM projected full-year earnings of $9.75 to $10.50 per share and said adjusted EBIT could exceed $13 billion. That outlook outweighed a mixed quarter in which adjusted earnings beat estimates but revenue was slightly below expectations.

Q: How much are tariffs expected to cost General Motors?

General Motors estimated that tariffs would create a $3.5 billion to $4.5 billion financial impact during the year. That range was slightly better than the company’s spring estimate. GM also expected new tariff mitigation policies to offset about 35% of those costs, contributing to management’s more optimistic outlook and the favorable investor response to its earnings report.

Q: Which vehicles drove General Motors sales growth?

Gas-powered pickup trucks and SUVs drove much of General Motors’ quarterly momentum. US sales increased 8% to more than 710,000 vehicles, giving the automaker its best market share since 2017. Electric vehicle sales also reached a record 66,000 units, although the company warned that demand would slow substantially following the expiration of federal tax credits.

Q: Why is General Motors reassessing its electric vehicle plans?

General Motors expects near-term electric vehicle adoption to be lower than planned, particularly after the expiration of federal tax credits. It recorded a $1.6 billion charge connected to this reassessment. Management said slower demand could create time to improve battery chemistry and vehicle form factors, reduce costs by thousands of dollars per vehicle, and prepare to scale when consumer demand strengthens.

Q: What supported Coca-Cola’s quarterly performance?

Coca-Cola’s adjusted earnings performed better than expected, helping its shares rise about 2.7% in early premarket trading. Coca-Cola Zero Sugar was a notable source of momentum, growing 14% during the quarter. Water and sports drinks also stood out across North America and other regions, and the company reiterated its expectations for organic revenue and adjusted earnings growth.

Q: Why did Coca-Cola report soft beverage volumes?

Coca-Cola reported flat North American volume and global unit volume growth of 1%, well below the 4% growth recorded in the third quarter of 2022. Management attributed some weakness to unusual weather, which it viewed as transitory. It also cited inflationary pressure, uncertain trade dynamics, and a changing geopolitical environment as broader forces affecting consumer demand.

Q: What were analysts watching in Netflix earnings?

Analysts were watching momentum in Netflix’s advertising business and expected the company’s content slate to help drive third-quarter results. The programming cited included the film K-pop Demon Hunters and live sports events. Netflix was scheduled to announce results after the market close and was identified as the first major technology company to report during this earnings cycle.

Q: Why were aerospace companies raising their forecasts?

Aerospace companies were benefiting from demand across both commercial aviation and defense markets. GE Aerospace raised its full-year outlook for the second consecutive quarter after third-quarter revenue grew 26%, while RTX also increased its forecast for the second time during the year. Large companies also appeared to be managing tariffs more effectively, with GE reducing its estimated tariff impact over time.

Summary & Key Takeaways

• General Motors reported adjusted earnings of $2.80 per share, revenue of $44.3 billion, and adjusted EBIT of $3.4 billion. Although the quarterly picture was mixed, investors welcomed higher full-year guidance, improving tariff expectations, strong pickup and SUV demand, and an 8% increase in US vehicle sales to more than 710,000 units.

• Coca-Cola delivered better-than-expected results and reiterated expectations for organic revenue and adjusted earnings growth. Global unit volume increased 1%, while North American volume was flat. Coca-Cola Zero Sugar grew 14%, but management identified unusual weather, inflationary pressure, uncertain trade conditions, and geopolitical changes as factors affecting consumer demand.

• Netflix was scheduled to report third-quarter results after the market close as the first major technology company to announce earnings. Analysts were watching advertising momentum and expected the company’s content slate to support results, including films such as K-pop Demon Hunters and live sports events. Stock futures remained mixed during the broader earnings rush.