GM’s Upcoming Stock Offering: Are You Angry Enough Not to Buy?

GM Total Confidence

Now that the midterm elections are over and the red tide has swept the country, we can turn to matters of real importance, like GM’s IPO. If you’re happy with the election results, the GM stock sale will probably get you angry all over again.

The company has set a target price of $26 to $29 per share, offering 365 million shares to reduce the U.S. Treasury’s holdings from 61 percent of the company to about 40 percent and raise up to $10.6 billion. (Others predict $12-16 billion.) The rescue of GM cost taxpayers around $50 billion.

Unless the stock price zooms, the government will take an initial loss (roughly $4-5 billion) in order to protect the price of the offering, which indeed is at somewhat of a discount. This may lead to a jump in price when trading begins on November 18, said one analyst.

GM’s figures look good, as revenue in the second quarter increased 44 percent over the previous year’s quarter. CEO Akerson has made repayment of the company’s debt to taxpayers a priority.

But none of this matters to those who are still fulminating over the bailout. They do not buy the arguments that the government will likely end up making money (in later stock sales) on the “loan” or that saving an industry and more than 1 million jobs was worth it.

2011 Chevrolet VoltNor will they accept the fact that the Obama administration was tough enough to force the changes that have made GM profitable again in so short a time—and given Chrysler a good chance of becoming so. If these companies had gone down the tubes, would Ford (which is now doing so well) have survived?

One thing that has given the naysayers good ammunition is the big tax break (up to $45 billion) GM is getting. The government essentially passed on collecting taxes from companies under the Troubled Asset Relief Program (TARP). This was done to make the companies “more attractive to investors.” And, of course, there would be no tax payments if these companies failed.

In doing that, the government seems to have ignored or set aside the presumption of fairness. And, according to some, special treatment for special interests has seemed to prevail in the Obama administration, even if these actions made economic sense.

I suppose that’s part of what brought about the red tide.

Are you interested in purchasing GM stock?

—jgoods

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2 Comments

  1. What kind of moron would put money into this dead horse? Remember that almost EVERYONE who owned stock in GM lost ALL THEIR MONEY, along with many suppliers, tens of thousands of employees who lost their jobs, many more tens of thousands at GM suppliers and related businesses, and even those poor schmucks at Delphi (salaried employees) who had their pensions dumped on the PBGC. Yes, so did the Delphi union employees, but GM conspired with the car czar and Delphi executives to “top off” the union employee pensions to pre-default levels, while Obamacar, GM and Delphi said SCREW YOU to the 20,000+ Delphi salaried employees/retirees. I reiterate, only a moron (or the federal government) would put money into this rotted carcass of a company.

  2. As an initial supporter of the auto bailout I have since been dismayed at the prospect of taxpayer monies never being returned to the public. The government continues to subsidize car makers with insane subsidies and tax “forgiveness” schemes. Now we are being told that the money will never be paid back. The unions are even trying to shed their support. The shirts at GM hate having any government oversight and are coming up with schemes like the one you detailed above. The bottom line in all these schemes are shareholder dilution and inflation of the stock price. There is no difference here when one looks at Fed policy which is trying to get us out of our gargantuan debt by debasing the dollar and endlessly printing money to inflate our way out of debt. I am old enough to remember that at one time “GM was America”. Now the automakers have been transformed into leeches sucking the blood out of every American and every fool that signs on to this IPO.

    Lets look at the scorecard. No new cars yet (the Volt, Cruze, and Regal were on the drawing board with the Bush administration. At Chrysler we’re going to get a Fiat Sardine Can with a Chrysler name and a reworked Sebring (the 200). Where is the innovation? That one is easy.
    Look at the hottest company on the planet, Hyundai, parent of Kia. Which cars are getting great reviews and are adding new plants and boosting production (and jobs). Hyundai!! Why?? Innovation, short development time, limited bureaucracy, and a PLAN. Other than Ford, I don’t see any of our other car makers doing anything to bring value to the market. Oh, by the way have we looked at the sticker prices of the domestics that are offered?? Oh, yeah, how about fleet sales? Domestic fleet sales are up 22%. That’s good news for resale prices?? I’ll pass.

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