General Motors Company (NYSE:GM) on recently announced a stock buyback. The buyback to the tune of $5 million will possibly end a standoff, with some shareholders. This standoff was pertaining to how the company spends its cash. This news has been well received on the market and, as a result, the company’s shares grew by 3% subsequently. Such is the magnitude of the news that stocks are near its 52-week peak.
This by recovering from last year’s unfortunate recall that led to the company’s stocks plummeting. The U.S. Biggest automakers reported that this recall cost the company $4.1 billion. Serious breaches forced the company to recalls 30.4 million cars and trucks. Tragically, 56 deaths were linked to the company having a flawed ignition switch resulting in the recall of 2.6 million cars. Additionally, operating profit fell by a $6.5 billion. This came in contrast to GM selling a record number of cars for the year. The company managed to break even, despite the recalling costs.
General Motors Company (NYSE:GM) noted that it remained resolute in its plan to grow its quarterly dividends. The company announced that shareholders will receive 6 billion dividends payout at the end of next 2016. Additionally, the company noted that it has come up with a contingency plan to always possess $20 billion in cash. This contingency plan is to militate any further mishaps that may befall the car industry.
The buyback has raised concerns in some quarters that credit agencies may be forced to review their stance on the company’s debt. A view not shared by the company. Credit Agency Moody’s did not alter its outlook on the company’s bonds nor ratings. However, they noted that the buyback was negative.
Despite the problems, General Motors Company (NYSE:GM)’s stock has been on the recovery path because of the continued fall in gas prices. Resulting from this fall in gas prices, there is expected to be a continued increase in the demand for trucks and SUVs.