Ford Market Cap 4X GM's
Published: March 13th, 2009
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TTAC reader John writes:
I was perusing MSNBC a short while ago, and noticed something that I thought TTAC might like to post. Ford now has a market cap four times that of GM’s. (Ford’s is 4.9 billion, GM’s is down to just over 1 billion). Ford’s stock is also now worth more than GM’s, which isn’t surprising, but hasn’t really happened before.
As Ken Elias pointed out a while back, the beginning of the end will come when GM is de-listed from the Dow and then the stock exchange. As far as life-sustaining bailouts are concerned, March 31st is the drop-dead date. A pre-pack would take longer, so . . . I bet Ken a steak dinner GM will get their/your/our money. I don’t think I’ll be picking up the tab. For the dinner.
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If he weren't so busy right now, Warren Buffett might add to this discussion that share prices are a reasonable measurement of a company's value when averaged over time, but in the short-term they are a popularity contest. Microsoft didn't suddenly lose 50% of its assets or future earnings power just because its shares declined by that amount. What changed was the short-term outlook, multiplied by fear, greed and impatience. GM stock is currently priced around $2.50 a share, but don't go looking for $2.50 worth of assets or earnings. This price is purely a matter of speculation... a lottery ticket in the unlikely event that GM survives. Short-term stock prices are like ink blots. You can see whatever you want in them, but it doesn't make it real.
@P71 When I emailed this to Robert, Ford was trading at $2.05, while GM was hovering right around $2.00. Still, though, this is a big change from even a few weeks ago when GM was staying right around double Ford's stock price.
An earlier correspondant was right. Ford is no longer interested in competing with GM and Chrysler - they are ever-decreasing dots in the rear-view mirror for Ford. The competition is Honda and Toyota and they seem to be making great inroads there - more 5* safety ratings than either Toyota, Honda or anyone else, cars and trucks that either equal or better everything that Honda and Toyota has in terms of fuel economy and quality that is on a par with both Honda and Toyota, and all of these elements are verified by independent groups (EPA, Consumer Reports and NHTSA). All this and no Government money to date - I know where I would rather be, and the market capitalization reflects that fact. Wall Street does not deal in emotions - it deals in facts.
[...] is under $1 Billion, Chrysler “net worth” is less than 1/2 that amount!.http://www.thetruthaboutcars.com/ford-market-cap-4x-gm/ What type of common sense or business acumen is being applied here? Who is stealing this money [...]