By on September 23, 2010

GM”s IPO scuttlebutt has been dominated in recent weeks by speculation about possible foreign “cornerstone” investors. But, according to five sources who spoke with Reuters

GM is likely to sell about 80 percent of the common shares in its IPO and more than 90 percent of the preferred shares in North America.

Yes, despite deep skepticism about the GM IPO’s appeal to retail investors, GM will sell most of its equity in North America, and it’s even splitting its share price to bring the per-stock price into retail range. Why the sudden back-away from talk of courting global investment and “cornerstone investors” from abroad? Politics, baby! With Chrysler likely to end up owned outright by Fiat, something had to be done to keep The General at least nominally American-owned. Meanwhile, in news that is sure to thrill prospective retail investors, Special Inspector General of the TARP program (SIGTARP) Neil Barofsky is investigating the IPO… and says GM’s per-share price will have to hit $133.78 (pre-split) for the Government to break even. GM’s highest-ever stock price was $94.63, and that was back in April of 2000. Are we getting excited yet, retail investors?

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9 Comments on “GM IPO Shifts Target To American Retail Investors...”


  • avatar
    Chicago Dude

    Ed,
    GM shares closed at $213.13 on September 11, 1926, the day before a 2 for 1 split.  On September 13, 1926, after the split, they closed at $142.00 and were back over $200 a share by June of 1927.

    • 0 avatar
      Educator(of teachers)Dan

      Ed must have been speaking “Post Great Depression.”  Although how much is $200 inflation adjusted?

    • 0 avatar
      86er

      Dan,

      westegg dot com /inflation is a good one.

    • 0 avatar
      Chicago Dude

      Educator Dan,
      Fair enough, but GM hit $100 a share in June of 1955 and stayed above $100 until another 2 for 1 split in November 1955.  It hit $100 a share again – in September of 1964, stayed in that general range until 1966, and then very slowly declined into the $30s by 1975.  It then started a very slow climb to about $80 by 1984, was in the $90s briefly in 1987, drifted around until 1989 when they did another 2 for 1 split. Ed’s price of $94.63 is the highest since that split.

      Ed just didn’t look far enough in the past.  Probably because all of this historical data isn’t free.
      By the way, if you had bought a share at the original IPO and held it, it’s value (adjusted for all of the splits) was in the $130 range back at the end of May 2009 when GM shares were trading at ~$1.00.  In January of 2009 when GM was trading at ~$3.65, that original stock was worth ~$450.

      My wife’s grandfather worked the assembly line at GM during the Great Depression.  They had an employee stock purchase program back then and he participated.  He retired a millionaire before he was 50.

    • 0 avatar
      gslippy

      $200 in 1927 is about $2509 today: http://data.bls.gov/cgi-bin/cpicalc.pl
       
      That was certainly a different GM then.

    • 0 avatar
      Educator(of teachers)Dan

      That’s about what I thought.  Comparing a peak price for a stock when you don’t put it in context is like gripping about the price of a gallon of gasoline without a historical frame of reference.  Think about a single piece of GM stock being worth enough ($2,000+) to buy a nice used motorcycle.

  • avatar
    chuckR

    If I buy at $10 and sell at $20, I’m happy. That $134 is a sunk cost, as in we’ve done been sunk.

  • avatar
    colin42

    and says GM’s per-share price will have to hit $133.78 (pre-split) for the Government to break even. GM’s highest-ever stock price was $94.63

    The price per share is irrelevant as it’s the number of shares x the price that states the value, although i do find it interesting how peoples perceived value of a share is directly related to it’s absolute price >$100 is expensive < $10 is cheep

  • avatar
    Steven02

    Some people are expecting splits up to 7 times to make the price under $20 bucks.  Will be interesting to see what happens.


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