GM stock likely need to rise 60% over IPO for govt to break even

[droski]

The new projections by GM say the company could have a stock-market value at the start of trading of $50 billion—about the same as the solidly profitable Ford Motor Co.—and that it could be as high as $60 billion, said people familiar with the plan.

But for the U.S. to break even through sales of the rest of its stake, the share price may need to rise more than 60% from its initial level, to about $50.

http://online.wsj.com/article/SB10001424052748704141104575588774041820254.html?mod=ITP_pageone_0

I'd be suprised if it actually didn't drop after the IPO considering they are already heavily marking this to retail brokers. Always a sign of a bad deal.

 

[myrobbins7]

Eh, yeah the more I look at this the more I don't like.

 

[volinbham]

To be honest - I figured it would take more than a 60% gain to break even

 

[droski]

if you have under say $5 mil liquid and you can get a piece of an IPO that generally means it's a bad deal. if you can get all you want you KNOW it's a bad deal.

 

[droski]

To be honest - I figured it would take more than a 60% gain to break even

that's assuming it comes at those levels which is no given at all.

 

[droski]

GM IPO announced.

365,000,000 shares. $26-$29 range. Should be interesting to see where it gets priced.

 

[BigPapaVol]

GM IPO announced.

365,000,000 shares. $26-$29 range. Should be interesting to see where it gets priced.

Retail pushed deals from old school companies are a pending disaster.
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[tigervol9802]

Need a bit of educating on this front - what's a retail pushed deal and what makes it different than normal?

 

[BigPapaVol]

Need a bit of educating on this front - what's a retail pushed deal and what makes it different than normal?

Retail means that brokers are carrying it to high net worth individuals rather than institutional investors lining up to buy. Means there is no institutional demand for the deal. The deal loses the ability of some big institutions to do the heavy lifting in the due diligence and pricing arenas. Retail deals are typically second rate.
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[droski]

exactly. the recent 50 year bond by Goldman was primary sold to retail and that isnt' a coincidence. the top underwriters give the institutions heavy priority over rich individuals for the basic reason that they produce a lot more revenue in other areas. if a retail client can get a piece of a deal that generally means the smart money isn't interested and you have to obviously ask why that is. this didn't used to be teh case btw. i have clients that got cisco and microsoft and amgen off of the offering, but that was in a day when the retail client was valued.

 

[tigervol9802]

Appreciate it. That's not good.

There's a lot of stuff in the financial services arena I need to refresh/get up to speed on. Halfway tempted to audit some night classes at UT to do it.

 

[volinbham]

Where does the 60% number come from?

I assume we currently own "x" % of GM for our initial investment. Some of that initial investment is being returned as proceeds from the IPO. Is that amount 60% less than what it should be (e.g. we are getting $10million for what was our investment of $16million; not counting the part of our investment that isn't being cashed out) or will we now own GM stock that must rise 60% to recoup the entire investment we made in GM and we are not getting any cash until we sell some of these shares?

Does this make sense?

 

[BigPapaVol]

Where does the 60% number come from?

I assume we currently own "x" % of GM for our initial investment. Some of that initial investment is being returned as proceeds from the IPO. Is that amount 60% less than what it should be (e.g. we are getting $10million for what was our investment of $16million; not counting the part of our investment that isn't being cashed out) or will we now own GM stock that must rise 60% to recoup the entire investment we made in GM and we are not getting any cash until we sell some of these shares?

Does this make sense?

Presumably, it's about limited recoupment here and dilution of our position at a much cheaper valuation than we bought in at. I think that's what you're saying.
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[joevol320]

again.......

would any of you on here buy their stocks?

i wouldn't touch them with a 10 foot pole.

 

[joevol320]

why would anyone want to buy government motors. who's to say that the unions will take over more when they go bankrupt again because it's just a matter of time.

 

[VolsNSkinsFan]

why would anyone want to buy government motors. who's to say that the unions will take over more when they go bankrupt again because it's just a matter of time.

you would be surprised

Idiots were clamoring to buy MTLQQ

 

[KentheOrange]

It's a mixture of "Much Ado About Nothing" and a .com offering.

 

[droski]

gm raising ipo price to 31-33. should be interesting to see if they get a pop at those levels.

 

[droski]

gm priced at $33. i must say i'm shocked. retail got a huge allotment. not sure if this is because of the size of the deal or the lack of institutional interest.

 

[BigPapaVol]

gm priced at $33. i must say i'm shocked. retail got a huge allotment. not sure if this is because of the size of the deal or the lack of institutional interest.

Deal was gigantic.
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[droski]

deal is so big i wonder if it's part of the reason rates are up and the market was dropping. that and the $10 bil of cal RANs.