After a steep run-up in GM stock (GM), Bernstein analysts are warning investors to proceed with caution.

Lead autos analyst Daniel Roeska wrote in a note Monday morning that while GM shares have jumped over 85% since November of last year, there are several headwinds on the way that could dampen the stock’s run.

Bernstein downgraded GM stock to Market Perform from Outperform and cut its price target slightly to $53 from $54.50. GM shares were down over 2% in early trading on Monday.

While a $10 billion share repurchase program and $6 billion open share buyback plan pushed shares higher this year, that effect only lasted so long. In a note titled “Let’s wait and see,” Roeska’s thesis hinged on a mix of concerns over the economy, product ramp-up with electric vehicles, and near-term cash needs.

“We think there is a risk the company will announce additional capital requirements during its October CMD [Capital Markets Day]. We want to wait and see which updates GM shares," Roeska wrote.

From a macro point of view, Roeska noted that continued inventory build in the US will lead to pricing discounts in 2025, impacting profitability. “We assume that discounts will need to increase as inventories are getting pretty high, currently standing at 70 days,” he wrote.

Meanwhile, GM’s EV ramp might not go as expected. GM’s 200,000 EV production target in North America for 2024 is likely beyond reach, Roeska wrote, and GM would have to quadruple sales in the final four months of the year to hit that goal.

“We expect the company to further lower its BEV [battery electric vehicle] guidance. As a result, variable profit [revenue minus variable costs] on EVs will be pushed back, and EBIT targets will be delayed to next year at best,” he wrote.

Of particular interest is GM’s Investor Day (dubbed Capital Markets Day by Roeska), slated for Oct. 8 of this year. While updates on the product roadmap will be helpful, Roeska and Bernstein are concerned about GM's rising capital usage and return of capital to shareholders.

In addition to updates on the EV path, there are cost concerns regarding GM’s hybrid strategy, including GM’s deal with Hyundai to jointly explore developing cars, powertrains, and various technologies.

Roeska is concerned that the joint venture with Hyundai will require significant capital expenditures which will dent profits. “We expect the [hybrid] endeavor to require catch-up capex on hybrid models reducing the FCF [free cash flow] available to return to shareholders.”

Further issues that may come up at GM’s Investor Day include costs associated with its upcoming transition to next-gen EVs on GM’s Ultium EV platform and investments in its Cruise autonomous unit. GM is shouldering most of the risk with Cruise since it has no partner.