In an April 26 report, JPMorgan Chase & Co. debt analyst Eric Selle said that the equity value of General Motors Co. could be set at about $68.6 billion after improvements were seen at its cash generation and profit outlook.
GM, which emerged from bankruptcy only nine months ago, may be able to command a stock price greater than $100. It's expected that this would entice holders of warrants to purchase shares that would lower the US government's controlling stake.
This would be 50% higher than Ford Motor Co. and lead to a share price of $113 to $137 a share (depending on the number of shares that GM chooses to sell). Maryann Keller, president of consultant Maryann Keller & Associates in Stamford, Conn., said that he's "optimistic" that GM will have a "tremendously successful IPO" and that this could eventually result to a $100 a share or more.
She said that the proof will be when more sales will be recorded. GM intends to have an initial public offering of shares as early as this year. The US government's 60.8% equity stake in GM originated from its aid in the company's July 2009 exit from court protection.
The warrants would enable a union fund and debtors to recoup more of their bankruptcy losses. Keller added that GM will have to continue to appeal to buyers this year. GM's US sales increased by 17% in the first quarter as the industry total rose by 15%. [via autonews]