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]

If you liked the article, share on:

Topics: barack obama, gm

Comments

Recommended

We’re willing to bet that the Bentley Bentayga is not the first thing that comes to mind for most people who are into off-roading and outdoor activities. It just doesn’t...
by - November 23, 2017
The other day, it was confirmed that Volvo will finally bring the XC40 to US soil, where it will first make an appearance at the 2017 Los Angeles Auto Show....
by - November 23, 2017
There is no question that the new BMW M5 (F90) high performance sports sedan is more powerful, faster and more enticing than the previous model. But for interested customers in...
by - November 23, 2017
Following the Tesla Roadster’s electrifying revelation on Thursday, Musk’s highly ambitious goals have skyrocketed when he tweeted about his future plans for the new sports car. Well, kind of. The...
by - November 23, 2017
Earlier in November at the 2017 SEMA Show in Vegas is when Hennessey unwrapped the Venom F5 to all of us. But it was actually first introduced as a concept...
by - November 22, 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