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Could revived GM net $100 a share in a stock offering?


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Could revived GM net $100 a share in a stock offering?

08:57 AM

With General Motors poised to report what is expected to be another encouraging month of sales today, the talk is growing louder that the troubled automaker might be able to successfully sell shares to the public sooner rather than later -- and lighten the ownership load on taxpayers.

GM might even be able to fetch a stock price greater than $100 a share if it initiates an offering as expected by early next year, Bloomberg says. The news agency cites an April 26 report by JPMorgan Chase debt analyst Eric Selle that values GM at $68.6 billion, substantially more than the value of Ford.

Such a GM offering could come as a relief to taxpayers:

The U.S. government acquired about a 60% stake in GM last year as part of the package to save the automaker, which went through a Chapter 11 reorganization. GM recently paid back debt to the U.S. Treasurer, but the ownership stake hasn't diminished.

Despite dire predictions when GM went through bankruptcy, its sales have been surprisingly strong. Some vehicles, like the Chevrolet Equinox, above, have been in constant short supply because of consumer demand.

"I'm optimistic that GM is going to have a tremendously successful IPO and maybe eventually get to $100 a share or more," consultant Maryann Keller tells Bloomberg. "The proof is going to be whether people are walking into dealerships and putting money down to buy a car."

Through its reorganization, GM has deep-sixed all but four core brands -- Chevrolet, Cadillac; GMC and Buick -- and severely cut its U.S. dealer network.

link:

http://content.usatoday.com/communities/driveon/post/2010/05/could-revived-gm-net-100-a-share-in-a-stock-offering/1

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which new model intro will the IPO concur with?

Much as I loathe the need for PR and communications in typical business, in this case the PR folks will be working OT to write all sorts of puff pieces to promote what GM is doing so they can receive max profit off the IPO.

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Yes, but then it might drop like a rock until some fair value share price is reached. Overvalued IPOs are an easy way for a company to make money at the expense of investors.

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Yes, but then it might drop like a rock until some fair value share price is reached. Overvalued IPOs are an easy way for a company to make money at the expense of investors.

Do you think Google is overvalued or undervalued? It went close to $200 for IPO and its has not dropped since.

I personally think $100 is optimistic for GM share, depending on how many shares they issue for the IPO. I personally think $50-60 is a more realistic number.

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Google seems to be one of those anomalies that defies the numbers, from the little I've looked into it. It's like it's being driven almost more by name recognition than hard analysis.

GM's IPO price is going to depend on both the volume of shares and a reliable consensus of it's worth at the time. Auto industry has an innate degree of unpredicability that keeps me away (turns into corner & kicks self WRT Ford @ circa 2.50/per).

Visa was critiqued for issuing a monster volume of shares at it's IPO of $58, but it's numbers were/are excellent otherwise- today it's right around $90 and still far under MC's circa $250/per.

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how can the price of the shares be discussed when the number of shares being issued hasn't been?

I should have added, based on the previous number of public shares of GM before it went bankrupt.

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Do you think Google is overvalued or undervalued? It went close to $200 for IPO and its has not dropped since.

I personally think $100 is optimistic for GM share, depending on how many shares they issue for the IPO. I personally think $50-60 is a more realistic number.

Re Google: IDK; I have never looked into that share

Re GM: I have seen investment banks' work on IPOs. Amusing to say the least.

Edited by ZL-1
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