The market is joyous this morning. The new GM has issued 478 million shares at $33 per share to the ignorant masses. None of the MSM stories examine the facts. Here are the facts:
- GM has “earned” $4.2 billion in the last 9 months as a new entity after their bankruptcy.
- The earnings per share for 9 months was $2.19
- In the latest quarter they “earned” $2 billion.
- If you estimate a 12 month profit of $6.5 billion, then GM’s earnings per share would be about $3.30.
- This would mean that the market is pricing GM at a PE ratio of 10.
GM’s earnings during this time were goosed by the great CASH FOR CLUNKERS giveaway. They were also goosed by the fact that GMAC continues to loan money to deadbeats so they can buy cars. GMAC loses $3 billion per quarter making bad loans. It sounds like GM is going back to their old business model. The American taxpayer eats the losses. When the economy goes back into the tank in the next year, GM’s profits will plummet again. Book it Dano.
If you aren’t smarter than a 5th grader, buy GM stock today.
GM stock prices at top end in return to market
IPO is second-biggest in U.S. history, based on sale of common stock
SAN FRANCISCO (MarketWatch) — General Motors Co. priced its initial public offering late Wednesday at the high end of the estimated range, setting the stage for the auto maker’s historic return to the stock market in the wake of its government-orchestrated bailout.
ReutersGM /quotes/comstock/13*!gm (GM 0.00, 0.00, 0.00%) is selling 478 million shares of common stock at $33 each to raise roughly $15.8 billion. If underwriters exercise options to buy more stock to cover over-allotments, the offering will raise $18.2 billion.
GM’s new shares will begin trading on Thursday morning under the ticker “GM” in the U.S. and the ticker “GMM” in Canada.
Additionally, the Detroit-based company raised $4.35 billion selling mandatory convertible preferred stock priced to yield 4.75%. If underwriters exercise over-allotment options, this offering will raise another $650 million.
Both offerings will raise between $20.1 billion and $23.1 billion, depending on the over-allotment options, GM said.
“As we prepare to enter the equity markets, all of us at GM are excited about this historic milestone,” GM Chief Financial Officer Chris Liddell said in a statement released after the U.S. markets closed. “We are especially appreciative of those who stood by us through the toughest times, and we are dedicated to creating value for all of our stakeholders.” See GM timeline.
Just counting the common stock portion, GM’s deal goes down as the second-largest in U.S. history, behind Visa Inc.’s /quotes/comstock/13*!v/quotes/nls/v (V 75.73, +0.89, +1.19%) 2008 debut, which raised $19.65 billion.
“The biggest IPO worldwide is momentous,” said analyst Scott Sweet of research firm IPO Boutique. “The demand is massive,” with the offering roughly six times oversubscribed, he added.
Thinker says:
Is it me, but is the government going all-out on a public relations campaign?
See, I work in PR, so when I see three stories like this in a matter of hours, I figure something’s up. They’re clearly trying to sway the general public. Or I could just be conspiracy-theory nuts.
4 Fresh Fears About Washington Wrecking the Economy
Not everyone agrees deficit is major problem
AP Exclusive: Raising retirement age hurts poor
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18th November 2010 at 5:20 pm
Thunderbird says:
Don’t be so hard on government motors this is part of our nation’s defense industry.
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18th November 2010 at 8:04 pm
Opinionated Bloviator says:
Short the shit out of it. Overwise avoid like the plague.
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18th November 2010 at 1:57 am