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Is GM's IPO a victory for the government?

General Motors, which has received $50 billion in government loans and bailout money, re-debuted its share into the stock market Thursday morning. The company priced the stock at $33 a share, and expects to fetch more than $20 billion in what's being hailed as one of the largest initial public offerings in history.

By Abha Bhattarai  |  August 18, 2010; 4:59 PM ET  | Category:  National Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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The pundits claiming GM will raise $70B might be off by two orders of magnitude.

No serious investors will put money into GM unless the government clears up two things:

1) If GM declares bankruptcy again, will the government screw the investors again?

2) GM still owes the taxpayers $50B. Will the government just forgive that loan?

Because if they don't, GM can't ever actually pay off that loan. It's impossible. Do the math... check out GM's current book value, check out how much they owe, look at their revenue, and the remember the magic of compound interest. The government will either have to ignore the loan, or GM will go bankrupt again in a few years.

Apparently the entire press is too lazy to use a spreadsheet to figure out that GM right now is a complete mirage.

Posted by: Ombudsman1 | August 18, 2010 10:23 PM

I owned stock in GM.

Then Obama, Holder, and the UAW stole GM by declaring a bankruptcy and rushing it through bankruptcy court in a single day.

Now 2 years later GM is doing "great". Why can't I have my stock back?

Because a Democratic President and AG took my investment to pay off the Democratic voters in the UAW.

To quote Nixon "when the president does it, it's not a crime".

Welcome to the Democratic Tyranny.

Posted by: krankyman | August 19, 2010 12:02 AM

the first comment is based upon a misunderstanding. GM does not owe the taxpayers 50 billion dollars. The government exchanged that for a 62 per cent equity in the new company. That will be partially sold in the IPO. There seems a good possibility that the taxpayers will get their money back and even turn a hefty profit on the deal. I feel for the second commenter. I too lost money on GM stock, but capitalism is a tough game. The auto bailout saved one million jobs. We kept the jobs and will probably make a profit. What's not to like,

Posted by: BillA2 | August 19, 2010 12:32 AM

Who is going to risk buying GM stock after Obama screwed the previous share holders and literally gave the company to the unions?

The same powerful unions, backed by the Democratic party, that forced 80% of our manufacturing jobs overseas by demanding $70 per hr, retire at age 50 with a full pension along with paid health/life insurance.

Posted by: fury60 | August 19, 2010 5:52 AM

Who is going to risk buying GM stock after Obama screwed the previous share holders and literally gave the company to the unions?

The same powerful unions, backed by the Democratic party, that forced 80% of our manufacturing jobs overseas by demanding $70 per hr, retire at age 50 with a full pension along with paid health/life insurance.

Posted by: Pembroke60 | August 19, 2010 6:11 AM

It depends...
...are there that many willing suckers out there?
Could be, based on the last presidential election.

Posted by: OttoDog1 | August 19, 2010 6:55 AM

For taxpayers to get back all they've sunk into GM, Gm's stock price would have to be $141 per share. Victory ? hardly, unless yr the gov where losing billions is considered victory.

Posted by: snapplecat07 | August 19, 2010 9:44 AM

Obama didn't 'screw' former stockholders, they did it to themselves. If you owned GM stock in the 90's or 00's you made your won mistake. Ever seen or driven a GM car from that era? And you owned the stock? Blame yourself for your losses.

Posted by: CCCinNaptown | August 19, 2010 11:02 AM

looks like a couple of you morons don't understand the word "risk".

here, let me send you a link to a dictionary explanation ... on the other hand, screw you.

Posted by: eezmamata | August 19, 2010 11:54 AM

krankyman:
"I owned stock in GM.

Then Obama, Holder, and the UAW stole GM by declaring a bankruptcy and rushing it through bankruptcy court in a single day."

No. GM was going to go bankrupt regardless of what the government did. If you owned stock in GM and couldn't see the writing on the wall, then you're pretty bad with your investments. Sorry.

"Now 2 years later GM is doing "great". Why can't I have my stock back?"

Because that's what happens when a company goes bankrupt. Why didn't you sell your stock and cut your losses?

"Welcome to the Democratic Tyranny."

Puh-lease.

Posted by: presto668 | August 19, 2010 12:33 PM

Another nail in the coffin of the conservative rant about socialism and the gov't taking over. You people act like frightened children most of the time. In another year not a single equity, pfd stock or debt in a private company will be in the gov'ts hands. They don't want it and understand perfectly it's not healthy for the country. Now sit back, shut up and let the adults deal with it.

Posted by: kchses1 | August 19, 2010 12:53 PM

As much as I want to see the taxpayers get out of the car business, I understand that getting our collective investment return will require some care in the sale of so much GM stock. Hopefully, it will be managed well, but that remains to be seen.

Posted by: OldUncleTom | August 19, 2010 5:50 PM

The Feds (and us taxpayers) are losing big time on this sale but the press won't report it. WSJ reported that the government was selling over half it's stake, and it's take of the possible $23 billion is really about $17 billion. The rest is going to the Unions and Canada. So do the math. Selling approx 60% for $17 billion represents a huge loss. And who is paying for those $7,500 tax credits on the Chevy Volt?

Posted by: doug7772 | November 18, 2010 11:20 AM


After all those billions of free taxpayer money Gov Motors is making a profit. And profit is what it is all about. So when are they moving everything to China like all of the other "American" products?

Posted by: maphound | November 18, 2010 12:30 PM

The stimulus measures in 2008 that 169 Republicans voted for, which was not as fiscally responsible as President Obama's plan and had no payback provisions, is expected to be overlooked in much the same way the economic freefall in December 2008, when we lost over 500,000 jobs in that one month alone.

A bankrupt automaker has built its revival and kept people working* thanks to us, and we will recoup our investment - that is, the wiser investment from President Obama's plan, which was better planned and well thought out (not like the first stimulus plan that 169 Republicans voted for, with only 25 against and the Boehner helped write).

The Republicans in congress who would prefer STILL to be campaigning rather than helping this country or legislating in a responsible manner, can yell away reality along with their best friend Roger Ailes, political strategist and President of a fake news channel; neverthless, reality will prevail.

So, to those Republicans and Teanuts who have arrogantly referred to their ludicrous bullying and defamation of this President's actual accomplishment in order to win and then stakeclaim it as "repudiation" - the only upheaval you actually accomplished was an upheaval of the truth. And if it's going to be business as usual - which is obviously what it's going to be - then for two years we will hear accolades from Roger Ailes' group of sycophants who pose as experts and this venal batch of thugs will get their palms greased.

Aren't we the lucky ones.

You can fool some of the people all of the time (teanuts in particular), and all of the people some of the time, but you CANNOT fool all of the people all of the time.

If I were a journalist, I'd prefer not to be so shortsighted as to participate in this current John Birch Society Cotillian.

Posted by: jKO2010 | November 18, 2010 12:50 PM

This is a sucker's bet. Take a good look at GM's debt and who is still holding what, 38% of the stock? This is reaching into the casual investor's pocket and stealing his money. The stock will be below $20 before Spring 2011.

Posted by: arobinson1 | November 18, 2010 2:05 PM

@kchses1 - it's you "adults" who got us here. Time to grow up and act in a responsible manner.

Posted by: arobinson1 | November 18, 2010 2:15 PM

It’s rather amusing that Tea Party parasites who had a vested in GM to fail for political purposes are on the tread trashing the highly successful IPO after one of the greatest turn around in corporate America.

These parasites who commonly refer to themselves as “patriots” would have preferred for the company to fail and with it the lost of hundreds of thousands of manufacturing jobs in the good ole USA.

Way to go GM – A job well done!

Also, great job Mr. President for your efforts in preserving American jobs and ignoring these parasites!

Posted by: Citi__Street | November 18, 2010 4:03 PM

This apparently infuriates Obama haters. They hate it when the things he does turns out to be the right thing.

If there's something they hate more than President Obama, it's being wrong.

Posted by: HillmanDC | November 18, 2010 4:04 PM

GM's pipeline isn't nearly as good as Ford's. SUVs are still where the money is, the margins are higher and they will be where the largest gains will be in mpg when the next generation comes out. People still want SUVs, and Ford is already ahead with the Escape.

The volt is PR. The Cruze is nice, but Ford already has vehicles to compete with it, and the rest of the lineup is better. And, if all things were being equal, even though my fam has been a GM family for generations, I'd by a Ford. They didn't screw us all. This is a bad stock. It's not value priced and even if it is a success, I would guess you can get it at a much better value in the next few weeks and months.

Posted by: NovaMike | November 18, 2010 4:06 PM

Let's call it a victory, so that when investments like the Volt bring GM back to bankruptcy, Obama can easily bail them out again and claim another easy victory.

Posted by: antispy | November 18, 2010 6:01 PM

Its fundamentally wrong to judge the success of the bailout on whether we make money. It is whether the tax payers are better off with or without the bailout. This is a no-brainer. Without the bailout we would have a massively reduced tax-base from the failed auto-related businesses, and the cost of welfare and other benefits for those who lost their jobs, not to mention pension insurance. So even if we lose a few billion it would be probably hundreds of billions better than letting the companies fail.

What is impressive is the skill of the government's bailout; the quick restructuring and round-tripping the investment to IPO in 2 years. Any private equity fund would be proud of this record.

For once our gov't both makes the right decision and executes extremely well, and yet people still need to create their own facts to support an ideology. Good job Obama and the auto team. You done good!!!!

Posted by: spencerj7 | November 18, 2010 6:15 PM

Those who insist "no serious investor" will touch GM apparently don't believe in the power of markets to price assets appropriately. No, there is no way for conservatives to win on this one; the market has spoken. Time to break out the crow.

Rep. John Boehner (R-OH): “Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multi-national corporation to economic viability?” [6/1/09]

Sen. Richard Shelby (R-AL): “It’s basically going to be a government-owned, government-run company. …It’s the road toward socialism.” [5/29/09]

RNC Chairman Michael Steele: “No matter how much the President spins GM’s bankruptcy as good for the economy, it is nothing more than another government grab of a private company and another handout to the union cronies who helped bankroll his presidential campaign.” [6/1/2009]

Sen. Jim DeMint (R-SC): “Now the government has forced taxpayers to buy these failing companies without any plausible plan for profitability. Does anyone think the same government that plans to double the national debt in five years will turn GM around in the same time?” [6/2/09]

Rep. Tom Price (R-GA): “Unfortunately, this is just another sad chapter in President Obama’s eager campaign to interject his administration in the private sector’s business dealings.” [6/2/09]

Rep. Lamar Smith (R-TX): The auto company rescues “have been the leading edge of the Obama administration’s war on capitalism.” [7/22/09]

Rep. Trent Franks (R-AZ): When government gets involved in a company, “the disaster that follows is predictable.” [7/22/09]

Posted by: fzdybel | November 18, 2010 6:35 PM

To the peddlers of the socialism lie I have repeatedly said the gov't wants nothing to do with owning the companies the gov't bailed out. Soon we'll be out of GM and all of the other companies (you people are simpleton idiots) Maybe with a profit, god forbid. I don't think this bail out was a good idea. Would be better for the auto industry in the long run if GM was allowed to fail. (Note to the GM stock holder above. Your investment was going to be total loss no matter what the gov't did or didn't do. This was a lousy business to invest in.) However I understand the fear that allowing GM to fail in the economic environment at the time could have had a cascade effect in the economy and gov't erred on the side of caution. Hopfully (and I hear hope springs eternal) we won't do it again.

Posted by: kchses1 | November 18, 2010 6:50 PM

And Rethuglicans said it couldn't be done.

They are right you know, especially, when they're at the helm of "ruining" our country and the lives of millions of Americans.

Posted by: lcarter0311 | November 18, 2010 10:55 PM

Why don't we cut to the chase. Those who are opposed to Obama, not necessarily the Government, do not, I repeat, DO NOT, want him to get credit for anything that just may have worked. You can look at the GM issue, the current START treaty, and a host of other things that just MAY be good for the country. But no. In the words of Mitch McConnell, and others, "our" #1 objective is to discredit or not give credit to President Obama. Forget the country. We must get Obama. Sad, really sad. And moronic as well.

Posted by: thinkfirst1 | November 19, 2010 12:05 AM

The left is quick to give credit where credit isn't due.
The rebirth of GM is nothing more than "smoke and mirrors" and creative bookkeeping. They certainly can't be said to have made a profit. Nor have they actually paid back any of the bailout money since what little they did pay back was with more borrowed/ gifted Tarp money. Without the tax breaks they currently enjoy GM would not be taking in enough money to even cover their pension obligations.
And we can expect things to get worse. GM has placed a lot of trust in the success of the electric Edsel, their coal/gas powered hybrid, the Volt. Outside of Motor Trend Magazine who named it car of the year (they also picked the Chevy Vega and AMC Pacer, enough said) and few other magazines owned by a certain U.S. media group, the Volt has been panned in the press as an over priced and poorly built Prius wannabe with a plug in battery charger. The car has not lived up to GM's hype in real world tests and is destined to be a costly failure. This will likely be the end of GM unless SIAC, the Chinese auto giant who already has a stake in GM and is thought to have snapped up most of the IPO offering, gets controlling interest in the company. If that happens the company might survive but it will be at the expense of wages, benefits ,and pensions.

Posted by: gravitysucks | November 19, 2010 9:09 AM

Mr. krankyman.
Did I hear you complain when you got all those dividend checks over the years? I guess you felt "entitled" to guaranteed wealth by owning stock. You and the other stockholders allowed management to do really stupid things and then expected to have the company remain sound. The unions have to share the blame but it was the stockholders that elected the Board of Directors. The company was going bust, with or without the "bailout", so your stock was virtually worthless anyway. The government actions at least savesd some US jobs that would have been lost. My investments took a hit because of the Bush policies but since I had diversified holdings (small as they are), I have recovered much of the value.

Posted by: pjohn2 | November 19, 2010 9:16 AM

@kchses1 - it's you "adults" who got us here. Time to grow up and act in a responsible manner.
Posted by: arobinson1 | November 18, 2010 2:15 PM

___________________________________________

Could you be anymore less specific if you tried? I'll assume (and if I'm wrong sorry) your one of the so called conservative crowd who runs around terrified of your own shadows, seeing socialists under every rock and terrorists under every head scarf. The adults have taken responsability and are getting the economy moving again.

As I've said last night why I can't see it on here right now is a mystery) I think in the long run it would have been better to allow GM to declare bankrupcy and start over. However there is a point to having rescued GM. It was a significant employer, in a significant industry at a very fragile time for the economy and allowing it to collapse could have had a larger cascade effect on the whole economy. I can see the point in the gov'ts action. I don't think it will work in the long run but when the short run is so dire then sometimes you do what needs to be done in the short run.

The lie (and that is exactly what it is, a lie) that this was the start of a socialist takover was the product of self centered ideologues who make obscene profits from peddeling lies such as that one. That people swallow these lies whole and then regurgitate them is a testament to some peoples stupidity.

Posted by: kchses1 | November 19, 2010 9:19 AM

Who would buy this stock?
Who would buy a gm product?
They build junk.
Another thing.
The American people bailed out gm, and the American people didn't have the opportunity to buy into the IPO.
They did let the Bank of China buy into it.
If the Chinese have anything to do with it, I don't want any part of it. They cook their books more than Enron.
Go Heels.

Posted by: koneill8 | November 19, 2010 9:37 AM

I think it is alittle too early to know what the details are but it seems like we are coming out of this recession and what about the next recession will we come out of that or is the government going into bankruptcy like General Motors and wiping out bond holders?

Instead of General motors holding debt the United States government holds debt. In other words we simply move the debt from one place to another. Who is going to pay off this debt and where is this money coming from? Anyone know?

Posted by: artg | November 19, 2010 9:59 AM

GM shed all its toxic assets (Hummer for example) and kept all its popular brands, what is the victory in this? And more importantly why did The Taxpayer fork over $50 billion?

GM could of gone bankrupt and the assets sold off to other businesses and it would not have cost the Tax Payers anything.

Posted by: ravioliman6666 | November 19, 2010 12:27 PM

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