GM Earnings Beat Expectations. Why Its Stock Is Dropping.

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General Motors

stock is dropping after the auto maker reported beat earnings but raised guidance less than investors hoped.

The company reported an adjusted profit of $1.97 a share on sales of $34.2 billion, topping expectations for $1.82 in per-share earnings from $29.9 billion in sales.

Operating profit came in at $4.1 billion in the second quarter and about $8.5 billion for the first half of the year, better than the $3.4 billion and $7.8 billion Wall Street projected for the second quarter and first half of the year, respectively.

General Motors (ticker: GM) guided for $8.5 billion to $9.5 billion in the first half of 2021 earnings in mid-June.

The company raised full-year operating profit guidance from a midpoint of $10.5 billion to a midpoint of $12.5 billion, implying earnings of about $4 billion in the second half of the year. Investors probably wanted more.

Shares are down about 3.6% in premarket trading.

The company sounds pleased with results though. “Halfway through 2021, I’m pleased to report we’re accelerating our progress and advancing our vision of a world with zero crashes, zero emissions and zero congestion,” said CEO Mary Barra in her quarterly letter to investors and employees.

GM management hosts a conference call at 10 a.m. eastern time to discuss results.

Shares of GM are up 39% year to date through Tuesday’s close, while the

S&P 500

and the

Dow Jones Industrial Average

have risen about 18% and 15%, respectively.

Write to allen.root@dowjones.com