• Sep 23rd 2010 at 2:02PM
  • 38
According to Neil Barofsky, the treasury department's inspector general, in order for the U.S. government to break even on its investment in General Motors, the company's stock will have to hit at least $133.78 a share. Thanks to the massive auto industry bailout, the government currently holds a total of 304 million shares of common stock and $2.1 billion in preferred stock in the automaker. According to The Detroit News, Barofsky has said that he will keep a close eye on the GM IPO in order to get the best return on the tax payer's investment possible.

But will GM stock hit the magic number? Some analysts seem to think so. There's some buzz that when GM goes public, its stock will be worth well over $100 per share. The company has already begun to make noise indicating that soon after the November 2 elections, it will begin a campaign to build interest in its IPO, so anything's possible.

[Source: The Detroit News | Image: AP/Al Goldis/Getty]

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    • 1 Second Ago
      • 4 Years Ago
      We have all been fortunate to live in a country with the worlds largest economy. We are moving fast at loosing it.
      For the nay sayers, if you don`t think GM matters think again.
      Bailing out the auto industry was the right thing to do.
      The first check was cut by the Bush adimistration. Both Obama and Bush did the right thing.
      We should worry more about the war money spent on Iraq than helping out a pillar of American wealth. The money spent on the Automotive bail out is peanuts compared to a war that did nothing for us at least in Iraq. Afganastan might be worth it but not too sure about Iraq.
      Whose going to pay us back for the war?
      For once tax payer money was spent on American interest.

        • 4 Years Ago
        The cheap imports and high cost of manufacturing (R&D, union) will drive GM back into bankruptcy again in a few years.

        I do not even blame the unions so much. They simply negotiated the best contract they could. How they managed to do that is a separate topic and probably not appropriate here. :-)

        If you want to save American jobs, you need to balance trade between America and other countries.

      • 4 Years Ago
      I guess I just don't get it. Ford stands on it's own two and yet stock prices cant break 15/share.

      GM gets bailed out and its projected that that it will sell at 100 with a projection of 133 to break even...
        • 4 Years Ago
        To add more to Hazdaz's comment using current :

        GM plans to sell at $133.78 and government has 304M shares = $40,669,120,000 they are looking to raise....which is government bail out money

        Ford on the other hand is currently selling at 12.43 and 34,348,399 shares = $426,950,599.57 they have raised.

        It looks like they simply are decreasing the amount of shares available to the public more then anything to try driving their price up / share right now. This is a good indicator though that GM is on the road for failure at making their goal, seeing as a whole I would personally invest in Ford before GM based on current product offerings...of course I will reserve my comments of market analysts as this is a PG blog...
        • 4 Years Ago
        "Ford stands on it's own two "

        Yeah.. after selling Aston Martin, Jaguar and Land Rover to Tata, and Volvo to Geely, sold most of their Mazda stocks, and then killing of Mercury. Which I've been bitching about how they have Lincoln, Volvo, and Mercury for some reason competing against each other. Even then it survived indirectly due to the bailout, if there was any bailout for the other two auto then Ford's Tier Two would have gone kaput!

        Their stocks actually went up after the bail out. I bought some stocks hehe. One of the oldest stock symbol to F, if I recall correctly.
        • 4 Years Ago
        Ford doesn't stand "on its own two". It was forced into a position of mortgaging off rights to products & iconic trademarks, and taking out huge loans at higher (less competitive) borrowing rates. GM & Chrysler are now financially supported by the US govt --- which will never default.

        GM and Chrysler have bright futures, just not in the exact way we would've wanted them to have. In their bankruptcy situations, now exist opportunities for more European & Asian design influences. They are not much more open to really competing with segment leaders instead of depending on also-ran, decades-old designs & platforms to keep their core businesses funded from year to year.
        • 4 Years Ago
        Ford shares do not go up because the company still has more debt than assets. It owes more than it owns and is essentially bankrupt (although nowhere near as bankrupt as GM was). However Ford has had some pretty decent income statements lately, which (combined with some investor optimism) elevate its share price to the current level.


        Old GM had most of its debt wiped out during bankruptcy, so New GM's balance sheet will probably look better. However, I doubt New GM will get the kind of valuations that would be needed for the government to break even. If GM cannot become consistently significantly profitable soon, unfunded pension obligations will become a problem.
        • 4 Years Ago
        Yeah, you clearly DON'T get it, but I bet that doesn't stop you, and soooo many others from complaining anyways, right?

        Stock price ALONE means squat. There are many more variables to take into account - the key one being the NUMBER of shares.

        2 * 1,000,000 = 2,000,000
        50 * 40,000 also equals 2,000,000
        • 4 Years Ago
        It depends on quite a few variables, most importantly how many shares are to be distributed. GM is probably offering far fewer than Ford already has out there.
      • 4 Years Ago
      What would of been worse, the US Gov't losing money or the US losing a crap ton more jobs?
        • 4 Years Ago
        I am in shock that there are people like you who realize that both Bush and Obama did the right thing! If GM and Chrysler had been allowed to fail at the same time the aftermath would have been damaaging to the US,Canada and Mexican economies. The whole parts supply system would have been wiped out not to forget about DuPont, PPG and Basf who supplies paint and adhesives at very low profits! There are many who think that all of Japans transplants would have also been damaged because they use many of the same companies.

        I hope that the government will prevent China from buying GM stock because they are the next wave of damage that will happen to the auto industry within the next 15 years.
        • 4 Years Ago
        We lost jobs anyway. Textile industry pretty much left the country years ago. Steel industry almost gone.

        What we need is for our government actively involved into balancing trade with other countries. Bailing out failed private enterprises will simply prolong the difficult situation, but it will not solve the problem of jobs for Americans.
        • 4 Years Ago
        Very few people see it that way. I agree 100%
      • 4 Years Ago
      It'll be worth over $100 a share if it starts at $10 and takes a 1:10 split.
      • 4 Years Ago
      The doors extend below the body. Weird.
        • 4 Years Ago
        I've never noticed that crease going across the fender and doors before. Very subtle.
        • 4 Years Ago
        No, the cladding under the door is just black. Most car doors do the same thing, it's just that the body below the doors is typically body-colored so it blends in.

        Does look a bit odd though.
      • 4 Years Ago
      The same-old, same-old bitch-fest starts in 3....2....1.... GO!
        • 4 Years Ago
        • 4 Years Ago
        Stop whining. The bitching about the bitching gets old, too.
        • 4 Years Ago
        • 4 Years Ago
        GM, like Gee (they're) MARXIST!!!!!
      • 4 Years Ago
      This is not exactly right. For the US to break even, its *average selling price* for its entire share -- which will be sold in chunks over the next 2-3 years, most likely -- has to hit that number. It does not have to hit that number on day 1.

      (Also note that the real per-share number will be considerably lower, as the stock will split before the IPO).
        • 4 Years Ago

        Can you please remove yourself from the gene pool? Prefearbly by getting crushed to death in a
        garbage compactor, by getting your face cut to ribbons with a
        pocketknife, your head cracked open with a baseball bat, your stomach
        sliced open and your entrails spilled out, and your eyeballs ripped
        out of their sockets.

        I really hope that you get curb-stomped. It'd be hilarious to see you
        begging for help, and then someone stomps on the back of your head,
        leaving you to die in horrible, agonizing pain.

        I'd love to kick your face in.
      • 4 Years Ago
      EVEN IF?

      EVEN IF????

      You don't use an even if, with break even (which usually means a base line minimum, not a maximum)

      If the IPO is being offered with an initial per-share price ABOVE 133$, then they are WAY too expensive, and not enough share volume is prescribed, and they should be split. maybe several times.

      If the initial per-share price is offered below 133, which it had better, then "even if" is distinctly inaccurate.

      "According to Neil Barofsky...in order for the U.S. government to break even on its investment in General Motors, the company's stock will have to hit at least $133.78 a share."

      WILL HAVE TO HIT AT LEAST, which is the opposite of EVEN IF.
        • 4 Years Ago
        You are reading it wrong. It is not "Even if..." it is read as "break even" when a certain criteria is met, which is $133.78 per share.

        I think you are reading it as "U.S will break even even if stock hits $133.78" which is totally different.
      • 4 Years Ago
      Honestly, while you may not like the idea of it, China may be the most likely means for the US taxpayers to get their money back. GM's Chinese partnerships sell more cars in China than any other market- but GM is not the majority owner of those partnerships. Chinese manufacturers would like to be able to buy the brands the produce and have access to new markets to sell Chinese-made cars. It would not surprise me to see some offers to buy-out GM's stake in some partnerships and to buy rights to certain brands in China. Daewoo could also generate some offers, as it is where many Chinese GM partnership cars are engineered. You may even see some complete buy-out offers. Now that much of GM's debt burdon has been eliminated, it could be a pretty good purchase for some Chinese companies looking to make the most of their expanding automarket and cheap manufacturing labor...

      • 4 Years Ago
      WTF is wrong with that photo?
      • 4 Years Ago
      I know I'd be EXTREMELY hesitant to buy GM stock, after what happened to many of the "Old GM" shareholders...
      • 4 Years Ago
      If the government is interested in breaking even they probably shouldn't be rushing the IPO.

      I doubt the stock will reach that level anytime soon but there's no denying without the crushing debt, portfolio of worthless brands/products, a trimmed workforce, better products and knockout business in China that GM could become a very valuable company once again.

      Also Chrysler could end up being worth more than Fiat as well as reported by AutoNews [credit TTAC]

      "Fiat’s 20 percent stake in Chrysler, currently with a zero book value, is the biggest positive element seen by analysts for the new Fiat S.p.A., which will comprise the Fiat, Alfa Romeo, Lancia, Ferrari and Maserati car brands when it starts trading on Jan. 3. Fiat’s truck and tractor units will be spun off on the same day into a new unit called Fiat Industrial S.p.A.

      Analyst estimates place the value of Fiat’s 20 percent stake in Chrysler at between 45 and 53 percent. Including synergies, Fiat’s stake in Chrysler is said to account for between 60 and 74 percent of Fiat Automotive’s projected value of €5.20 and €7.40 per share."

      And our government just gave it away to Fiat.
        • 4 Years Ago
        Heh, the government wouldn't even buy Chrysler for $1. What else are you gonna do?
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