General Motors Co. has reached a $5.75 million settlement to resolve claims that the vehicle maker made false statements regarding its ignition switch recalls to California Public Employees’ Retirement System (CalPERS) and other investors, Reuters reported on Feb. 13.
General Motors (GM) said it was “pleased to have cooperated with the state of California to resolve this matter,” according to Reuters.
California Attorney General Xavier Becerra was quoted as saying, “General Motors cheated California twice – first by concealing a fatal flaw in its vehicles, then by concealing the facts about the flaw in its financial disclosures, which affected the retirement investments of public servants across California.”
The ignition switch issue has been a costly affair for GM. In 2014, the company started recalling some of its car models to repair ignition switches that could suddenly move from the “run” position to the “accessory” or “off” position resulting in loss of power and air bags failing to deploy in the event of a crash.
According to Reuters, the company has previously paid about $2.6 million in total penalties and fines related to the ignition switch issue. In 2017, GM also agreed to pay $120 million for claims resolution to 49 US states and the District of Columbia over this issue. (See General Motors stock analysis on TipRanks)
On Feb. 11, Credit Suisse analyst Dan Levy reiterated a Buy rating and a price target of $68 on the stock. Levy is optimistic about GM’s transition to electric vehicles (EVs) and believes that the company’s EV strategy is an ambitious and holistic one among other legacy original equipment manufacturers (OEMs). The analyst expects that GM will make further positive announcements regarding its EV initiatives.
The rest of the Street is bullish about the stock with a Strong Buy rating. That’s based on 12 analysts suggesting a Buy and 1 analyst recommending a Hold. The average analyst price target of $61.15 implies 14.1% upside potential to current levels.
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