General Motors (NYSE: GM) went public on the New York Stock Exchange Nov. 18, and the initial public offering of $33 quickly gained momentum. GM stock rose as high as $35.99 per share and closed at a modest $34.19, a full $1.19 above its first public price in over year.
It was a banner day for GM, according to the Wall Street Journal. The embattled car company can now repay some of its investors, namely taxpayers, with ample stock sales. Look for GM stock to be quasi-volatile until investors settle on the company’s outlook and growth over the next several months.
General Motors has nowhere else to go but up. The past two years were perhaps the most dismal in the car company’s history. Here’s a look at how GM climbed to where it is today.
September 2008 saw the giant automaker celebrate its 100th anniversary by throwing a huge party at its corporate offices in Detroit. By November 2008, CEO Rick Wagoner was before Congress begging for money to guarantee loans.
In all, the Bush administration loaned GM $13.4 billion in late 2008. If the company could not prove its viability by the end of March 2009, it was forced to repay the loans with interest. The Wall Street Journal reports, in an unprecedented move, the government purchased a majority stake in General Motors, quickly followed by its stock selling for less than a dollar by May 2009.
Despite efforts to the contrary, GM couldn’t hold it together and filed for bankruptcy June 1, 2009. In its restructuring plan, GM planned to sell off some major brands in order to make the car company smaller and more sales-worthy.
In April 2010, sales of General Motors cars looked bleak. In the six months since emerging from bankruptcy protection, the automaker lost $4.3 billion. Despite this fact, Daily Finance reports the government’s loans to GM were repaid in full.
New Stock, New Future
As soon as stock was sold in the company, taxpayers owned less and less of General Motors. The government put 400 million shares of stock on the market and should recoup about $13.6 billion from the sale.
One of the world’s largest automakers should do well from here on out. The stock price will probably go down after initial excitement wears off. But at least the stock won’t sell for less than a dollar per share.
Profits are in the billions of dollars now for General Motors as the company retools itself to make even more money in 2011 with new and better cars.
Conway, Brendan, “GM Stock’s High Profile, Volatility Make Options a Prize,” Wall Street Journal.
Wall Street Journal, “A Tumultuous Time for General Motors Since Bailout,” WSJ.com.
Kawamoto, Dawn, “General Motors Repays Bailout Loans Early,” DailyFinance.com.