• Nov 18, 2010
The first day of a new era for General Motors has ended. The automaker released its IPO this morning on the New York Stock Exchange, and after reaching a high of $35.85 around 10:45AM EST, the stock price slowly retreated back to earth and settled on $34.19 for a closing price. Sure, you might see a downward trending line on the above graph, but GM can celebrate the fact that its stock price still ended the day more than a dollar above the $33 at which the IPO was priced to kick things off, a respectable rise of 3.6%.

Now that the day ended, President Obama has planned a quick preference to talk about General Motors that's starting as we speak. You can watch it live on the Whitehouse.gov website.

[Source: Daily Finance]



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  • 54 Comments
      • 4 Years Ago
      From WSJ.
      "So we see the Obama Administration is happy with how Uncle Sam's investment in the auto industry is emerging from this week's initial public offering for General Motors. The Treasury says the IPO netted the government $13.6 billion and puts the U.S. on a path to recoup the $50 billion (at a minimum) it pumped into the out-of-gas auto maker. GM has already paid back some $9.5 billion of its loans from the government. The U.S. ownership stake in GM will fall to 33.3%, with the prospect of future stock sales eliminating most of it over time."

      Will be interesting to see how GM will pay back the rest. They made a good amount of this IPO. It will be interesting to see what the price will fall or rise to. If the Market acts efficiently it will probably drop. But there are so many crazy factors to this IPO its hard to say. I will not be buying. There is a bit to much risk for me, and not enough prof that the risk will pay off well.
        • 4 Years Ago
        @montoym,
        IPOs are historically sold to the highest bidder which are large mutual funds, banks, and other large investment companies. These Companies buy the shares based off the company financial reports using financial ratios to determine what the price should be, or what they should pay for them.
        Most companies unload a lot of the shares into the market to the public and get a premium for them. After the shares actually go public the price usually booms then settles at the price that again reflects the companies balance sheet.
        GM did not sell their Initial shares at a discount. They got what investment banks, Mutual funds, etc would pay for them.

        What will really influence the price will be GMs ability to post good profits and make wise financial decisions. If price inefficacies take place, arbitrageurs will quickly come and bring the price where it needs be.
        I actually own a program that looks for price inefficacies in the market using a variety of formulas. It will not update till Monday. It will be interesting to see what the different formulas and ratios value GM at.

        As for the comment about the Market improving. That will be interesting to see if it actually does. Im a firm believer that the Market will not look the same.
        • 4 Years Ago
        This isn't a typical IPO. Most IPO's are priced low initially which accounts for the bump once trading begins.

        In this case, in order for the treasury to squeeze as much out of it as they could with the shares they offered, the shares carried a higher price than it would have otherwise. That's largely why the stock didn't jump in price the first day, it was priced correctly to begin with. For the same reason, I don't expect the stock to start to "settle down" either.

        Additionally, the treasury cannot sell all of their shares anytime soon anyhow. They have to wait at least 6mos for the "lockup" period to expire after which they will begin to sell off additional shares. In all reality, it will be probably a few years before all those additional shares are sold.

        With the stock market currently in a so-so environment, a few years from now, things going look dramatically different(and likely better).
        • 4 Years Ago
        quote from Dan: - "Will be interesting to see how GM will pay back the rest. They made a good amount of this IPO" -

        It's not up to GM(at least directly). The Treasury still has a 33-37% stake in GM after the IPO(depending on who you ask), they didn't sell all of their interest in GM with the IPO. When the treasury sells off the remaining interest it has is when the rest will be paid back. GM already paid off the outstanding loans to the treasury that weren't tied to an interest in the company.

        What is up to GM in order to give the best return to the treasury on the remaining shares is for them to continue to post profits and prove that the busness is being run better now, so that their share price will rise. With the remaining shares that the treasury holds, they'd have to sell them at about $50-some/share in order for the treasury to break even.

        This link should help break everything down somewhat more clearly, http://online.wsj.com/article/SB10001424052748704104104575622310680141250.html
        • 4 Years Ago
        I do not mean it as an attack on UAW. This is economic analysis.

        There is one factor that is not random and that is UAW. The New GM has an agreement with them right now. Someone else posted that this agreement is good for about another year. What will happen after the end of this agreement? Will UAW demand more benefits? Will New GM give in to these demands? Will investors perceive the behavior of the New GM being the same as behavior of Old GM? Will investors come to conclusion that New GM is moving to the same fate as the Old GM? Will the investors dump the stock of the New GM?

        Nothing random (crazy) to the above chain of events. We have seen it all before... and we know how badly most investors ended up too.



        Raise the import tariffs. Fair trade, not free trade.
        • 4 Years Ago
        @montoym,

        That is HUGE to bring your price up 20 dollars when the Stock is most likely overvalued already. With 90something% of IPOs the price shoots up after the IPO happens then it settles back down. So this means that GMs Price per Share will most likely drop a bit. It may take a couple of years for shares to get up to $50+ and then you have to figure what the over all market will do. We have already had a bit boom in the market. Im not expecting anything that great to happen. And GM will have to do very well in the up coming years to get their PPS up to 50s. Price is determined by the state of the company and a bit by emotional investors (most who are buying in now).
      • 4 Years Ago
      With all the hype the stock barely eeked out a 3.6% rise? This is bad news, as soon as the hype is gone (I give it 2 weeks max) the stock will start to go down.

      I feel sorry for anyone that bought this dud of a stock today.....
      • 4 Years Ago
      I could be completely wrong but I definitely would not invest in General Motors. Yes, they have gotten rid of bad debt, they have very competitive new products, they have shed dead weight brands, dealers and factories but I have seen almost no indicators that the company is being run much differently as it always has been, with a ton of waste, red tape, and bureaucracy, not to mention the revolving CEO door. I hope I'm wrong but I wouldn't invest my cash in that company, Ford on the otherhand though has my confidence as an investor. Ironically though I drive a GM product, not a Ford.
        • 4 Years Ago
        I agree. GM is also on quite a hiring binge, although the workload doesn't seem to justify it (based on talking to employees in the bloating engineering groups). To me, this looks like they are reverting back to their old ways. As thier costs rise, profits will not come so easily.
      • 4 Years Ago
      I hope the government can dump all the stock before the $30 billion in pension obligations come due in 2013.
      • 4 Years Ago
      Well it looks like the IPO was priced perfectly for us tax payers. If the stock had gone up a lot during trading, it would have meant we left money on the table by selling at the $33 IPO price.
        • 4 Years Ago
        Yes, the IPO was priced correctly for day 1... however, I still think it's overpriced. GM hasn't been able to prove itself well enough yet with their new products. They've done some good things by cutting dead-weight (read: Saturn, Pontiac, SAAB (or is that still ont he books, I can't keep up), Hummer). But now they really need to focus their efforts much more closely on bringing relevant, exciting, and profitable products to the marketplace in a much more timely fashion. I mean, we're still far away from getting the Volt on the roads, and it was introduced years ago now. They need to speed up their entry to market of their products, Ford is just killing them lately. I wish GM well, but they still have a ways to go.
        • 4 Years Ago
        I was wondering. Since 17% of GM is now owned by other countries (i.e. China and Middle Eastern investment funds) does this mean that GM is partially a foreign country like Chrysler is? Just wondering!
        • 4 Years Ago
        Exactly. Being just a dollar under the settling price means that GM got pretty much the maximum return on the shares they issued.

        Well done, GM - I'm feeling like we're actually going to get our money back!
        • 4 Years Ago
        Yes, the IPO was priced correctly for day 1... however, I still think it's overpriced. GM hasn't been able to prove itself well enough yet with their new products. They've done some good things by cutting dead-weight (read: Saturn, Pontiac, SAAB (or is that still ont he books, I can't keep up), Hummer). But now they really need to focus their efforts much more closely on bringing relevant, exciting, and profitable products to the marketplace. I mean, we're still far away from getting the Volt on the roads, and it was introduced years ago now. They need to speed up their entry to market of their products, Ford is just killing them lately. I wish GM well, but they still have a ways to go.
        • 4 Years Ago
        GM is still registered as a US company, and headquartered in the US.

        The fact that foreigners can buy shares (just as we can buy shares of Toyota / VAG) does not make GM a non-US company.

        If, (non-US) foreign shareholders should one day acquire a majority stake, with commensurate voting power, one supposes they could take over the board and then force GM to move or be acquired overseas.
      • 4 Years Ago
      Is that on the preference line or in a preference room? You think they may use a special preference phone?
      • 4 Years Ago
      I'm probably going to get down ranked for this but....
      I have a feeling after thanksgiving when all the hype is gone and the day traders move on this stock will steadily start to decline all the way down to the low twenties/ high teens. Then when the Volt goes on sale it will shoot up a bit, and quarterly results are released it will shoot up some more. Around this time the Gov. will begin to sell out their portion which will then in-turn make the price drop drastically. The perfect time to get in for the long would be sometime next summer or the following season.
        • 4 Years Ago
        Why should GM stock go down?

        GM doesn't have debt service issues, isn't fleet dependent like Ford / Chrysler, drives profits on recession volumes, and has a good product mix, with all-new Volt winning several awards.

        GM sells more cars than Ford, and should be driving more profit, so why would they be worth so much less than Ford?

        You make no sense.
        • 4 Years Ago
        I don't have to think GM sells less fleet than Ford - it's a fact, and you can look it up under fleet sales for the big 3.

        GM is running about 25% fleet sales (as they said they would)
        Ford is about 30% fleet (vs 25% claimed)
        Chrysler is 40% fleet

        GM even sold a smaller number of vehicles to fleets than Ford did, only somewhat more than Chrysler.

        Facts.
        • 4 Years Ago
        Not sure if you understand how it all works, but for there to be a buyer, there has to be a seller.
        The Gov't is already selling off a lot of their shares, that's how the IPO happens. Their ownership in GM dropped from 61% to about 33% with the IPO and will drop further when GM releases the 71.7 Million greenshoe shares

        quote - "Proceeds from the IPO and the preferred-stock sale will go largely to the U.S. government, whose 61% stake will be reduced to about 26% once the greenshoe shares are sold." -

        http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=2588f105-4acf-4dda-81f1-d947a1814e15&_nwpt=1



        • 4 Years Ago
        Actually, GM averages 31% fleet sales while Ford averages 35%. Also, while GM sells more cars than Ford, Ford sells higher quality cars-- and that too, is a fact.
        • 4 Years Ago
        And after that, SAIC buys a majority stake.
        • 4 Years Ago
        John...do you really think GM sells less to fleet customers than Ford or Chrysler? If they do, it's only because they have dropped Ponitac's portion.

        Ask any analyst who's stock they prefer to have and they will say Ford. Ford is still in better shape than GM even without having all their debt washed away and favorable labor agreements.
      • 4 Years Ago
      I wouldn't have been as surprised if it ended at half this really. Which actually makes me wonder if maybe it'll be stalled here for a bit.
      • 4 Years Ago
      This is just one more stop on the road to GM being owned lock, stock, and barrel by the Chinese and SAIC.
      • 4 Years Ago
      Off to a good start.
      • 4 Years Ago
      I am looking at Yahoo Finance:

      Open price: 35 dollars
      (not 33 dollars in sight)

      Last trade price: 34.19 dollars.

      After hours at 6:03 pm EST: 34.08

      As far as I can tell the stock finished DOWN.
        • 4 Years Ago
        Sorry for the double post. IE gave me an error and I went back to finish my comment and submitted it. Not sure why the partial original comment went through, I never clicked "add comment"
        • 4 Years Ago
        It's higher than, but still close to the $33 IPO price. For GM and the taxpayer, that's what matters, and it's very good news.
        • 4 Years Ago
        http://moneycentral.msn.com/detail/stock_quote?symbol=GM

        MSN shows the price at $34.19 currently with a gain of 1.19.
        The IPO price was $33, that's what all the initial shares were sold at, aka the IPO.

        WSJ also agrees, http://online.wsj.com/article/SB10001424052748704104104575622310680141250.html

        quote - "General Motors Co.'s shares rose a modest 3.6% Thursday, allaying concerns that the revitalized car company had priced the shares too high in its initial public offering a day earlier.

        The stock opened at $35, a 6% rise on the IPO price, climbing to an intraday high of $35.99, up 9%, before settling at $34.19 in 4 p.m. composite trading on the New York Stock Exchange." -

        Note this quote later in that same article - "Underwriters aimed to keep GM's first-day "pop" at 10%, give or take two percentage points. Though investors have come to expect bigger pops—in recent months stock sales have gone as high as 40% to 50% on their first trading day—bankers were dealing with a most unusual seller, the U.S. government.

        Unlike private-company IPOs, where the selling company often is willing to sell at a deeper discount to ensure a good first-day send-off for the shares, the U.S. Treasury, the biggest owner of GM, wanted the maximum amount possible for its investment, which was financed with taxpayer dollars. There was concern that politicians and Wall Street would be criticized for leaving money on the table if the stock soared too high." -

        In other words, with the current share price staying relatively close to the IPO price, it means that the Government got about the maximum return they could have expected for the shares they sold off.
      • 4 Years Ago
      With union goons dictating every move GM is condemned to inefficient management.
        • 4 Years Ago
        GM management has been inefficient by itself before the union goons gained a share of the ownership. Adding the union goons just adds an extra layer of incompetence.

        It takes two to tango, chief - whether you like it or not.

        Your ideology (ideology = idiot + logic) is just as irrational as the libs' ideology

        "Democrats, Republicans & Tea Partiers - first-world prosperity for themselves, third-world prosperity for the rest of us"
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