GM Stock Hits 26-Year Low, Headed Lower
On Friday, after GM detailed the financial damage caused by the American Axle strike and union shutdowns at two of its plants, the American automaker's stock price slid to $17.38– it's lowest level since February 1982. Once again, GM saved bad news for the end of the week; the stock market couldn't fully react to the revelation. As the markets are closed for Memorial Day, it'll be Tuesday before investors [literally] take stock of the situation. They'll also take into account GM's busted accounts— a deficiency that caused numerous financial restatements, triggered an SEC investigation in October 2005, caused the ouster of CFO John Devine in December 2005, and forced the "resignation" of controller Paul W. Schmidt and chief accounting officer Peter R. Bible in May 2006. Meanwhile, in the here and now, the U.S. new car market is moribund (to say the least) and there's little prospect of immediate recovery. GM's high-profit trucks and SUVs are dead in the water. Suppliers are up against the wall, with a "run on the bank" scenario (cash on the nail, please) looming large, The stock market is waking-up to the perfect storm we've been predicting for months if not years.
UPDATE: GM stock hovering at $17; down three to four percent.
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As I'm writing this GM stock is trading at a little over $17. It appears, based on a quick scan of monthly prices since 1962, that GM slumped to $30 in the mid-70's. If the price of GM stock had just kept par with inflation, it'd be about $125 today.
VW's have decent mileage for a European car. The TDIs do quite well and get 40mpg real world. Saying that the rise in gas prices is not foreseeable is very short sighted (just like the D2.8). Simply all you have to do is look back 30 25 years ago at the late 70's - early 80's where we had the same problem - or even further back during the previous 4 wars where we had to conserve to satiate our militaries demand for fuel. Then consider the world oil supply has not been increased yet world and US demand has increased unabated...here is a county where 8mpg suvs are commuters and daily drivers for a single occupant. It was foreseeable - but chance favors the prepared and the D2.8 were not (and snubbed their nose at small cars - often in a Lutz cocky fashion).
detroit1701: As opposed to your statement that no one forsaw the rapid price in oil prices three years ago, that is not correct, Toyota had announced about that time they were moving to a predominate hybrid fleet within ten years, where was GM? Still making plans for the next general of large vehicles. GM caused this mess they are in, please explain the messed up financials, as reported on this site a few days ago? Explain the Fiat fiasco? The huge bonuses and salaries GM executives are receiving, despite the company continuing to lose billions? The bail out of suppliers? You state: "GM is figuing it out", that statement alone is kind of scary, a company that has been in business for a hundred years is just now "figuring it out", it appears THEY DON'T HAVE THE TIME NOR MONEY to figure it out. Where did all the money they were making in the 90's on the big high profit vehicles go? They were making thousands of dollars of profit on each vehicle, where did all that dough go?
Was GM making $$$$s of dollars of profit on those vehicles or just swapping around assets, goodwill, etc. behind closed doors? No one knows and with GM's management's high specialism in Accounting - one begs to wonder why they had such bad accounting.