GM will have to convince investors to buy shares in its initial public offering

Article by Christian A., on August 27, 2010

It will be "a tough sell" for General Motors Co. to convince investors to buy shares in its initial public offering, according to Peter Jankovskis, who oversees $2.3 billion as co-chief investment officer at OakBrook Investments in Lisle, Ill.

For GM to succeed, investors have to overlook the declining market share, its record of only being profitable for less than a year, and the new management.

Last Wednesday, GM revealed that its North America market share could drop by 2014. It also predicts that growth will slow in the second half of the year after having returned to profitability only in the past two quarters. 

Data compiled by Bloomberg indicate that GM will require a market capitalization of $69.4 billion after the IPO for the government to be able to break even on its investment.

This stands for more than three times the value of GM's equity at the end of the last bull market in US stocks. It is also 65% higher than Ford Motor Co.'s market capitalization of $42 billion.

GM's filing with the US Securities and Exchange Commission enumerated the obstacles that it will have to overcome in order to generate enough investor demand to complete an offering that insider sources have said may be as high as $16 billion.

Jankovskis said that investors may be hesitant because GM has only posted two quarterly profits and the CEO is leaving. He said that these factors aren't typically linked with an "IPO that's going to be highly subscribed." [via autonews]

Topics: gm, ipo, shares

If you liked the article, share on:

Comments

Recommended

The Europe-bound WRC hatch developed by Toyota and Gazoo Racing team will be limited to just 400 examples as reported by AutoCar this week. Otherwise known as Gazoo Racing Masters...
by - July 21, 2017
Even cops get excited when they’re assigned to drive the best cars in the market. In Austria, police officers drive around in a Porsche 911 Carrera while in Milan, authorities...
by - July 21, 2017
Subaru has already announced that the all new Impreza will be out by fall this year. The 2018 model year not only gets a number of new upgrades, but it...
by - July 21, 2017
Do you ever wonder what challenges automakers have in selling limited edition cars? It’s different for each company but it can get stressful if the demand is high instead of...
by - July 21, 2017
Alpine is said to be developing an SUV which is believed to be the Porsche Macan’s closest rival. According to AutoExpress, the newly revived performance brand has been looking to...
by - July 20, 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