Cruise Q2 financials are much worse than presented
On 7/23/2024 GM released its financial returns for Q2 and H1 for 2024. You can see the GM Q2 financial results and the earnings deck yourself. But while some articles further the GM statements that the situation for Cruise is looking better given that they lost only $500M in Q2 2024 compared to $600M in Q2 2023, the details show that Cruise is in an extremely precarious financial position.
Use of EBIT instead of GAAP
The first sign of hidden trouble is that GM uses for Cruise EBIT (Earnings Before Interest and Taxes) as opposed to GAAP (Generally Accepted Accounting Principles). EBIT is not a useful tool given that it allows the accountants to include or exclude various elements. That is why EBIT is not the generally accepted accounting method. GM using EBIT for Cruise, and Cruise alone, is a sign that there is more information if one digs into the details. Unfortunately reporters often take financial statements at face value and therefore simply report that Cruise lost only $0.5B in 2024 compared to $0.6B in 2023, therefore they are supposedly doing better.
An example of the adjustments that can be done with EBIT is shown below. Cruise had a restructuring cost of $0.6B in Q2 2024 yet did not include that in their loss statement. The excuse they give is that the restructuring costs are a one time anomaly having to do with them shutting down operations in fall of 2023. But that they also claimed the same thing, a one time expense, in Q4 2023. Using the excuse that something is a one time expense, twice, is not reasonable.
Income statement shows large and increasing loss
When one looks at the detailed financial results, which are unfortunately in rather tiny font, one readily sees that the income for Cruise was a loss of $1.242B for Q2 2024. Not only is this large very, very large, but it is also almost twice that of the loss of $0.651B for Q2 2023.
Cash is disappearing quickly
Cash on hand of $1.1B might seem like quite a bit. But even if one only looks at the reported EBIT expenses of $0.5B per quarter one can see that unless more money is provided by GM, Cruise will run out of cash in just a bit more than 6 months.
GM has announced in June an $0.85B additional investment into Cruise. This addition appears to not be included in the Q2 financial results. Therefore Cruise might obtain enough cash to survive until end of Q2 2025. That certainly is not enough time to turn Cruise into a viable business.
Conclusion
Cruise is burning more money than reported by GM. At best, Cruise has enough money to survive until Q2 2025. That is certainly not enough time to turn Cruise into a viable business.
I still expect that Cruise will be announcing a radically different future by the end of 2024.
