Despite recent earnings GM stock is getting hammered by investors.

A year after it made its return to public trading, General Motors’ stock is being hammered by investors, the market driving shares of the once-bankrupt automaker down by a third of what it debuted at in November 2010.

GM shares have fallen sharply in recent weeks, though it has rebounded slightly this week, but at around $22 a share the stock is still off by nearly a third from its IPO price – and down by more than 40% from its 52-week peak.

“What we are looking at is an increasingly challenged economic environment going forward with a lot of uncertainty,” GM Chief Financial Officer Dan Ammann said after the maker announced a $1.7 billion profit for the third quarter of 2011.

GM is solidly back in the black after rolling up tens of billions in losses during the years leading up to its 2009 filing for Chapter 11 protection – from which it emerged only after lining up roughly $50 billion in federal aid.  The company says it ended the most recent quarter with $33 billion in cash and nearly $6 billion more in credit lines.  It has meanwhile seen its share of the global automotive market climb to 11.9%, up from 11.4% a year ago.

So, what’s not to like?

“GM had decent earnings,” acknowledged Joe Phillippi, a long-time Wall Street analyst who now heads AutoTrends Consulting, “but, significantly, GM Europe slipped back into the red.”

The maker had hoped it finally had GME back in the black after years of losses – which nearly led GM to sell a majority stake in the German-based Opel subsidiary to a Russo-Canadian consortium in 2009.  The European arm of the maker broke even during the first quarter, was profitable in the second, but analysts are now uncertain whether GM can achieve its goal of turning a profit for all of 2012 on the Continent.

Of course, GME isn’t unique.  With Europe’s economy frayed and debt problems with Greece and Italy threatening to scuttle the Euro a number of other makers are feeling the chill as European consumers tighten their pocketbooks.

Most manufacturers on that side of the Atlantic have seen their own stocks hammered, as has Ford, the number two U.S. marque, which is also highly dependent upon European demand.  From a 52-week high of $18.97 a share, Ford was trading at just $10.89 on midday Wednesday.

But GM has other reasons to be worried, investors contend.  The maker has been heavily dependent, in recent years, on the booming Chinese market, now the world’s largest source of automotive demand.  GM, in particular, has become that market’s largest maker and recently predicted it would double sales there, to 5 million annually, by mid-decade.

But the Chinese market is suddenly showing signs of weakness.  True, demand is still growing at a pace the U.S. market can only envy, but for much of the past decade, noted analyst Phillippi, the Chinese market grew at an annual rate well into double digits.

“That could be a longer-term problem for GM,” he warned.

Following the $23.1 billion General Motors IPO, shares quickly soared beyond the initial $33 strike price, peaking at $39.48.  Some analysts began forecasting the numbers would reach $50 or even higher.

That was a critical number for the U.S. Treasury as it would come close to allowing it to break even on the roughly one-third of GM’s remaining stock owned by taxpayers.  At the current figure, the government could lose as much as $15 billion.

Many analysts remain bullish – at least when they’re looking beyond the current global economic turmoil.  “GM still offers upside,” writes Barclays Capital analyst Brian Johnson.

But how long it will take to reach that potential is something few are willing – or able – to predict.