- General Motors could brand its Cadillac as the next Tesla given the right marketing ploy, Adam Jonas of Morgan Stanley said.
- The automotive company is undervalued because investors have not properly gauged the potential of Cadillac.
- The luxury vehicle’s biggest market is China, representing an upside for General Motors’ stock.
- You can view GM’s stock price here.
With aggressive marketing, the automotive company has the “potential for fundamental repositioning of Cadillac as a ‘captive Tesla,'”Adam Jonas, an equity analyst at Morgan Stanley, said. The company needs to improve consumer awareness of its brand and technologies, such as a future propulsion system and a subscription-based business model, he added.
Investors have been undervaluing General Motors because Cadillac is larger and more profitable than investors believe. “Discussions with investors suggest a potential “blind spot” on the strategy and valuation of General Motors,” Jonas wrote in a note.
Cadillac reported a sales increase of 15.5% year-to-date, as of December 2016. GM does not break down the profit for its specific brands though.Jonas estimates that Cadillac could be worth $US13 billion given the increasing sales, which have doubled since 2010.
Cadillac’s largest market is China, which accounts for over a half of GM’s global sales volume.
General Motor’s stock is trading at $US44.29 a share and is up 5.93% over this year.