Underperforming automotive holdings are forcing investors to re-examine dividend sustainability and executive leadership. On the Mad Money episode aired on August 11, Jim Cramer responded to a caller who purchased Stellantis N.V. (NYSE:STLA) two years ago for its dividend, only to suffer persistent capital depreciation and earnings misses. Cramer commented:
Okay, you got to step up from that bad corn to Silver Queen corn. You know what that means? You got to go into General Motors. I don’t even think of Stellantis as being investable right now. But GM? Wow. Make the move. Make it tomorrow.
Executive Leadership Drives Cramer’s GM Conviction
Cramer’s preference for General Motors Company (NYSE:GM) over Stellantis N.V. (NYSE:STLA) stems directly from his trust in chief executive execution. During the April 17 episode, when a caller showed intent to invest in the industry and asked whether they should invest in the EV or ICE industry, Cramer responded:
I’ll tell you something, you want to invest in, this is the way I look at the autos… but I want you to invest in Mary Barra. Mary Barra is amazing. She’s an incredible person who is a great CEO, the great CEO of General Motors. If she weren’t running GM, I don’t know if I would ever recommend it because I think she’s that sensational. You buy the stock of General Motors and don’t worry, she’ll take care of whether it should be electric or not. She’s amazing.
Comparing Bear Cases: Structural Friction vs. Legacy Cyclicality
For Stellantis N.V. (NYSE:STLA), the bear thesis revolves around severe operational missteps. High North American dealer inventory backlogs, aggressive price discounting, and volatile cash flows have eroded profit margins. The company’s ultra-low valuation could be viewed as a value trap, as earnings misses threaten payout safety and highlight multi-year brand restructuring drag.
On the other hand, the bear case for General Motors Company (NYSE:GM) focuses on cyclical macroeconomic pressures and capital allocation risks. Another thing that could be noted is the slowing pace of consumer EV adoption, rising production costs, and potential margin compression in its core truck and SUV segments. While GM’s valuation remains inexpensive, the question arises whether execution alone can offset broader automotive demand headwinds.
Hedge Fund Sentiment
Hedge fund positioning tracked by Insider Monkey highlights stronger institutional backing for General Motors Company (NYSE:GM) despite broader auto sector headwinds. General Motors Company (NYSE:GM) was held by 77 hedge funds in Q1, down slightly from 81 in the prior quarter. In contrast, hedge fund sentiment for Stellantis N.V. (NYSE:STLA) dropped from 34 holders in Q4 2025 to 32 in the following quarter, showing weaker smart money conviction.
Valuation and short positioning further show the divergence between the two automakers. Stellantis N.V. (NYSE:STLA) trades at a forward P/E ratio of 13.40x with a short interest of float sitting at 3.63%. On the other hand, General Motors Company (NYSE:GM) offers a much lower forward P/E ratio of 6.64x and a lower short interest of 2.29% of float, showing that market bears remain far less aggressive against GM.
Stellantis N.V. (NYSE:STLA) remains bogged down by operational headwinds, higher valuation multiples, and declining hedge fund interest. While both legacy automakers face cyclical challenges, GM’s cheaper valuation, lower short float, and strong leadership under Mary Barra present a far more compelling alternative.
While we acknowledge the risk and potential of GM and STLA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GM and STLA and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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