GM
General Motors Company
stock NYSE

If you've heard of EOSE before, it's probably from the run up that happened this time last year and the subsequent debacle that has led to a 80% drawdown, worst drawdown since the 5.60 - 0.60 one after the DoE conditional agreement in 2023. They make non-flammable stationary batteries that can but don't necessarily have to compete with Li-ion (see [https://investors.eose.com/news-releases/news-release-details/mn8-energy-google-and-eos-energy-enterprises-bring-advanced](https://investors.eose.com/news-releases/news-release-details/mn8-energy-google-and-eos-energy-enterprises-bring-advanced) ), different use cases but can operate in that range. There is a longer, extended time frame thesis but I will do my best to keep the info relevant to the earnings play.
Chart:
Potential triple bottom / inverse head and shoulders here on weekly/daily.
Earnings:
EOSE has begun a trend of releasing preliminaries this year after the Q4 2026 debacle. The massive sell off was due to expectations being missed after reaffirming guidance 35 days into Q4. They have since been in the penalty box; market has lost trust (or so it seems) and needs execution and fundamentals to show up before it can be rebuilt. It seems that they have been releasing preliminaries to reconcile with this, Q1 preliminaries released 9 days after Q end, Q2 released 15 days after Q end.
Risk/reward:
This environment creates a potentially asymmetric trade, with the market discounting EOSE's execution due to Q4 2025. It is psychologically scarring to endure these drawdowns or be down 50% on an earnings play, the damage is immense. And if that's all you know about the company you will disregard it, and lose trust in management and what they say. But the last 2 quarters they have been meeting their own timelines; accurate about DOE Tranche for Line 2 coming out, Q1 revenue being similar to Q4, Subassemblies (crucial part of line design that unlocks nameplate capacity of 2GwH, important for getting to margin profitability) coming online in July like they said for Line 2. Quote from Q2 call:

"The H2 exceeds the H1, the Q4 is higher than the third. The bottom of the range takes roughly $50 million of H2 growth over the H1. That is just maintaining the run rate that we exited June with on revenue already secured through backlog and Frontier Power USA."
The difference is that in Q4 2025 they had to TRIPLE Q3 2025 revenue to meet guidance on first generation automation and they were a company learning to scale; they had supplier issues and missing redundancies to guarantee line function if something went wrong. For 2026, all they have to do is continue the run rate they already proved they could do. But the interesting part is that in June Line 2 started producing. It is a more efficient and better designed line in a new manufacturing building that isn't 100 years old (like where Line 1 is). Line 2 contributed 1% of Q2 2026 output, and adjusted gross margin was -62%, while revenue and cube shipments were up around 20% QoQ. Line 2 barely coming online and producing was masking the improvement in GM.
It is interesting that they clarified that it is the run rate they EXITED June with as well, saying that the end of June was higher than the beginning, but not because of Line 2 (1% total contribution). So Q3 is set up to have a higher initial run rate from the beginning AND Line 2 ramping.
Another quote from Q2 call:
"Hey, Chris. Lower end is basically continue the run rate of June throughout the rest of the year to get to the 300. The higher end of that is to not so much get line one up and running in Thorn Hill, but to get Thorn Hill the full 24/7 operation by the time we get into the end of the Q4."
It sounds like the higher end of guidance is contingent on them getting capacity online, not more orders.
Quote from Q2 call:
"Combined, these initiatives provide what we believe is a clear path to over 72 points of adjusted gross margin improvement over the next 12 months, assuming we execute our plan and **achieve expected production volumes."**
What would expected production volumes be? The amount needed to meet the low end of guidance one could assume, which is the run rate they exited June with.
https://preview.redd.it/ld5pzxg5wksh1.png?width=2048&format=png&auto=webp&s=edcb49bc82e23dc0bd32253c3f7758ebce0a9468
"Targeting Q4 26 adjusted gross profit positive exit run rate."
Putting it all together, they have a path to gross profit positive that could happen 13 weeks from now. It sounds like it is based off the expected production volumes, which I am understanding as what is needed to make the low end of guidance which is $300m, which is the run rate they exited June with. But the run rate for Q3 should be higher, because they are carrying that higher run rate from Line 1 (which Q2 only had at the end of June) for all of Q3, while Line 2 ramps up to 2 shifts. And "Q4 is higher than the third." Which makes $300m sound very conservative, in line with the general tone of this year after the Q4 2025 debacle. The last 3 earnings calls have been different in tone, less promises and "selling of the future" and just a more conservative, potentially sandbagging tone.
The risk here is that they are moving Line 1 to Thornhill to upgrade it (inherently inefficient design, was designed to fit the building of Turtle Creek, not for efficiency) so it's congruent with Line 2 (and future lines) in Q4 and Line 2 is going to have to carry the Q4 production after the move. No exact timeline on when in Q4 the move will happen. I don't imagine them moving until they are confident in Line 2. But to me, Line 2 is just a more efficient line 1 with built in redundancies (so Q4 doesn't happen again), it isn't proven yet at higher utilizations, but the general concept of the lines producing has been with Line 1.
To reach $325m (middle of guidance), H2 needs to be $199.3m. If Q4 is only **5% larger than Q3**, you'd need approximately:
**Q3: $97.2M**
**Q4: $102.1M**
For that Q3 growth, you'd need a 41.2% rise in revenue. Revenue grew from Q1/Q2 by around 20%, without an extra, more efficient line ramping (and Line 1 run rate was higher at end of Q2 than the rest of the quarter).
And $325m I assume is above the **"expected production volumes"** used to calculate the path to GM profitability, so at 325m the numbers are improving much more rapidly than expected.
From Q1 call:
"a 17% sequential increase in cube output accompanied by an 18% improvement in gross loss, approximately $10M".
Now this wasn't replicated in Q2 because of poor overhead absorption of an early Line 2 producing, but it shows the operating leverage they have.
Macro environment:
It's clear that the AI race isn't stopping, and the constraining item could very well be electricity. Batteries stop curtailment and allow the grid to be more efficient. Energy prices are rising with the current geopolitical events. Winter is coming and for many states, the grid performing could be a matter of life and death. On August 26th, the DoE implemented a major foreign battery ban. EOSE is domestically manufactured and 91% domestically sourced.
Recent partnerships for with Department of War for Golden Dome and the Army [https://www.frontierpowerusa.com/frontier-power-usa-selected-to-advance-energy-resilience-project-at-tobyhanna-army-depot/](https://www.frontierpowerusa.com/frontier-power-usa-selected-to-advance-energy-resilience-project-at-tobyhanna-army-depot/)
[https://investors.eose.com/news-releases/news-release-details/eos-energy-enterprises-selected-deliver-mission-ready-power](https://investors.eose.com/news-releases/news-release-details/eos-energy-enterprises-selected-deliver-mission-ready-power)
If Q3 proves margins coming down with all these tailwinds, a re-rate is possible. EOSE could become a darling in the BESS/LDES space, perception can change fast because quarters of progress have been largely ignored by the market while they approach a potential inflection point in the company by scaling at a time where the TAM is absolutely massive and necessary for the grid, AI, national defense, and to lower consumers energy costs. Also the timing of Line 2 coming online and Line 1 becoming fully ramped in Q2 creates a situation where Q3 can show massive improvement in GM.
nfa/dyor

The move is in the guide. Street has $31.50 on a $31 guide, so a $32–$33 print is a shrug. The real swing is whether Mehrotra guides $35-plus with mid-80s gross margin held as the run-rate, and whether he previews the December 9 buyback unlock. listen for: Q1 guide versus the $35–$37 whisper, mid-80s GM as the run-rate, and buybacks after December 9. If those land, the $1,032 low is dead and the stock runs to $1,150–$1,200 by Friday.

Ya they did the same thing in 2008 with GM, it’s a bipartisan strategy until orange man bad

GM breweries. Kabhi khushi ho ya gham, daaru hamesha chalta hai

"right but Tesla is already valued as much as Ford, Toyota, and GM combined". Heard it all before

At a 16x fwd multiple and the headline numbers being worse than what I expect going forward, Celsius sales and GM, I believe with a good quarter or two that fwd multiple could rise to 24x. And for the long term I think Celsius and alani are not going to go away.

100% agree. But the data is pretty overwhelming and at some point common sense takes over. It's like saying a GM has no control over the results of the team. What is definitive is that supply side economics, which is primarily the GOP economic position, has never produced the promised widespread economic boost. Profit and shareholder value? Yes, but not in any other form.

GM had 185B in revenue last year and has a market cap of 85 Billion.
Make it make sense.

I am curious what they are depreciating that yields $60M+ in D&A (slide 29). Are they depreciating a bunch of computing equipment?

I wish they would put in a cash flow or more complete P&L. They have a net loss of $33M for 2025 but somehow get to a +$55M in adjusted EBITDA.
What are they spending so much money on to go from $246M in revenue and 80% gross margin that yields a $33M net loss in 2025? Is this simply a highly labor-intensive consulting type business where GM doesn't really mean much in how they are reporting it?

VW is going down. About 100k jobs expected to be axed in the next years, they are closing multiple factories in Germany. Already 65% down from 5 years ago.
They fired the man who wanted to pull VW into the future 5 years ago. They fired Herbert because "he was going to fast".
It's only a value play if you mean negative value. The company is royally fucked. I don't see a future for it unless they become a shell sales company for the Chinese like GM just signed a contract for.

GM ☀️