GM is making more money than it has in its history but it’s still a headache for Obama

Article by Christian A., on December 26, 2011

With General Motors Co. increasing its earnings and widening its market share, the Obama administration is in a dilemma and may be opening itself up to criticism no matter what it does. The $50 billion government bailout had rescued GM. Last Thursday, GM closed at $20.70 a share -- less than half the $53 price that the U.S. Treasury Department requires to break even. On Dec. 19, its shares closed at their lowest price since last year’s initial public offering.

Since then, the shares have increased for three consecutive days. Sources said that the stock would have to rally nearly 50% to attain $30 a share. This is the minimum price that the Treasury Department would consider for a secondary offering. This August, when a candidate is nominated by Republicans, the government will most likely either still own a significant portion of GM or it would already have sold the stock at a loss that could be over $10 billion.

Dan Ikenson, an economist at the Cato Institute, a Washington think tank, said, "The administration is in a Catch-22.” He explained that GM is hoping to wait to obtain the best price but the longer they’re holding on to it, the more its critics will say that the administration “still has a horse in the race and could make policy that is favorable to GM."

Adam Jonas, a New York-based analyst at Morgan Stanley, said that investors are holding back on purchasing GM due to the expectation that the U.S. will be offering hundreds of millions of shares for sale. This may lower the price but then its shares are expected to rally soon after the government sells. [source: Bloomberg]

Topics: barack obama, gm

If you liked the article, share on:

Comments

Recommended

Nissan revealed that the new 2017 Rogue Sport crossover will be priced in the U.S. market at $21,420. Specifically, this is for the front-wheel drive version of the Rogue Sport...
by - April 26, 2017
Remember the E30 BMW M3? Yes, the one from 1990. If you remember it right, it was also the company’s most iconic car and probably one of the best BMW...
by - April 26, 2017
Ferrari is cooking up something interesting for us. The last time they released the 488 GTB was two years ago, followed by a 488 Spider and several versions of it....
by - April 26, 2017
After launching the latest version of the BMW M550i xDrive, the German carmaker is now introducing its diesel counterpart -- the new M550d xDrive (G30/G31). Available either as a sedan...
by - April 26, 2017
A lot of news has been going around about the 2018 Dodge Challenger SRT Demon lately, and people are arguing whether the 840 horsepower vehicle by Fiat Chrysler should be...
by - April 26, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries