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As of 11:00 AM, shares of General Motors (NYSE: GM) are trading down 1.74% to $1.13 per share. They already briefly touched the $1 per share mark earlier this morning. It seems likely that, given how volatile the stock's trading has been of late, it will hit 99 cents at some point today.What does it all mean? As a matter of practicality, it means nothing: 99 cents is only 1% less than $1 per share. But it does suggest that investors are finally coming to terms with the fact that General Motors' common stock is likely to be made completely worthless by the bankruptcy filing that the company's brass is finally admitting is likely to come.
There's been a suggestion that GM's current shareholders will get a 1% stake in the new company that will emerge out of a restructuring, but if it goes to bankruptcy, even that seems unlikely: Shareholders aren't entitled to a nickel -- bondholders always come first, and that 1% sliver of equity would really just be a gift. In a bankruptcy situation where everyone is being asked to take less than they're owed, creditors will balk at the notion of giving anything to the common shareholders who own equity in a company with more liabilities than assets, which makes the stock, by definition, worthless.
GM stock is still, in all probability, heinously overvalued. With a market cap of around $650 million for a company that is worth $0, there's no other way of looking at it.
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Reader Comments (Page 1 of 1)
5-13-2009 @ 1:40PM
P. Rockwell said...
Where do you pundits come from? The moon? Am I the only one who sees our economy collapsing?
5-13-2009 @ 2:53PM
babyraymond8 said...
I cant believe this company is taking tax payer money only to close more U.S. plants and Import more vehicles from overseas. That is madness. I support the U.S. Industry and the U.S.Worker. Be American!! Buy American!!
5-13-2009 @ 2:59PM
TX CHL Instructor said...
No way I will ever buy a Pelosimobile. http://www.youtube.com/watch?v=rAqPMJFaEdY
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www.chl-tx.com
5-15-2009 @ 8:04PM
UAW LIVEON said...
I have to give GM credit this is the scam of the century. They get our tax dollars to shut down plants here increase production is China. Then ship the auto back here to sell. Genius NOW WHO'S IDEA WAS THAT THE CARZAR
5-17-2009 @ 7:59PM
Duke said...
GM should be taken off the Standard and Poors list of 500 companies that matter on Wall Street. GM is no longer an American icon. They are history. The new Camaro will sell for a while and the few people that have money will have bought their new Camaro and GM will be in the dark again.