Marketplace is a public service newsroom powered by you. Give Now

GM shares will trade for the first time since they went bankrupt

Marketplace Staff Nov 18, 2010

GM shares will trade for the first time since they went bankrupt

Marketplace Staff Nov 18, 2010


JEREMY HOBSON: A little later this morning shares of General Motors will trade for the first time since the car-maker went bankrupt in June of last year. GM is making its Initial Public Offering which is expected to be the second largest IPO ever.

Marketplace’s Stacey Vanek Smith is with me here in New York with more. Good morning Stacey.

VANEK-SMITH: Good morning.

HOBSON: So we’ve been talking about potential strong investor reaction to this IPO. How is it shaking out?

VANEK-SMITH: It’s been pretty impressive. GM shares were sold yesterday for $33 each. That’s almost $10 more per share than analysts were predicting. Today shares start trading and GM share price is expected to go up even more. I spoke with David Cole, with the Center for Automotive Research about why there’s so much hype.

DAVID COLE: What really is important to investors is projected future earnings. And when you see the current earnings with a very tough, still, economy, it tells you if things improve, this is going to be a very profitable company.

GM just recently posted its first profit in more than 6 years.

HOBSON: Yeah, it’s been quite a transformation for that company, which was asking for bailout money just over a year ago. Is this new GM really that much better than the old one?

VANEK-SMITH: I put that question to Robert Shultz with Standard and Poors Corporate Rating. He said bankruptcy allowed GM to get rid of billions in debt. Especially those so called legacy costs, which were links like retirement benefits and healthcare.

ROBERT SHULTZ: They’re not under the sort of pressure they historically were to produce vehicle just to cover these large fixed costs that they had — lot of employees, a lot of plants. That should help their competitive position.

HOBSON: OK now Stacey, the big question: will GM be able to pay the government back, and finally shed that nickname Government Motors?

VANEK-SMITH: Well, that’s another story. GM’s stock price would still have to go up by more than a third for the government to get it’s money back.

HOBSON: Stacey Vanek Smith here in New York, thanks.

VANEK-SMITH: Thank you.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.