Blogging Stocks: GM Worth $0
Published: March 16th, 2009
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Blogging Stocks pulls no punches. The site leaves GM with a black eye, calling the company a “portfolio killer.”
This is a ridiculous company with an even more ridiculous management group. General Motors'(NYSE: GM) cars are mediocre, its union contracts are incredibly extravagant in a brutally competitive industry, and management seems to think we are still in the 1950s.
Recently, the company’s auditors raised even more concerns about the automaker’s ability to survive without more loans from the government.
GM’s own forecast assumes survival based on a car market that is larger in 2013 than it was in 2006. Yeah, right.
True shareholder value: zero
More by Robert Farago
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In the American corporate model the corporation is run by the executives and the board of directors for the benefit of shareholders. It may be that people who lose money in their shares will come around to the idea that every time they didn't turn up to the annual meeting, or threw away their proxy ballots for the BoD, they countenanced what the corporation was doing. The ultimate responsibility for these meltdowns was irresponsibility, all right, because the shareholders believed the "don't worry, be happy" noises coming from mahogany row. I wonder whether we shall now have more activism by shareholders who realize that an investment is not free money.
mikey: "Us oldtimers remember the oil crisis,the early eightys and ninetys.It got tough then,but we bounced back." The Original Oil Crisis, spurred by the Arab Oil Embargo, was in 1973. I believe there was a second around 1978 or so. By the time of the oil crises you recall, GM had already lost two rounds without giving any thought to the third. mikey: "In hindsight,sending High school dropouts into thr ring,with MBAs Lawyers and spin doctors,perhaps wasn’t such a good plan." You should read "October Sky," which was also titled "Rocket Boys" in some printings. The author was Homer Hickam.
Investors have already written off GM. Its stock price gives it a market cap bouncing around $1 billion. That's effectively zero. Buyers and sellers of GM stock are bottom feeders who try to make money off the ups and downs. Get the timing right, and you can double your money in a week. Get the timing wrong, and you can lose it all. That kind of froth lends no substance to GM's stock. Buyers who buy it as a long-term investment would signal some worth there. Don't seem to be any of those. With GM stock at effectively zero worth, GM is in one way effectively in bankruptcy already. Too bad it does not take that step to get the tools that bankruptcy brings.