11.12.2010
GM IPO Update
original article written by Net Advisor™
A follow up article from “GM All Charged Up on Volt and IPO.”
GM had changed their IPO date to launch after the November election. The original date was set for August as previously reported by Reuters. The new IPO date is expected the week of November 17th or 18th. IPO dates are not guaranteed, and are frequently changed by either the company and or mostly likely the investment bankers needing more time to do the deal or looking for the right day to launch the IPO.
As expected the fanfare and talk is all over the media. CNBC been running what seems to be daily programs on the auto industry, namely Ford (paralleling interest in auto stocks). Lots of spin talking up GM (dog and pony show – common for IPOs to get buy interest up) which is working.
GM reportedly has buy orders for $60 Billion stock, more than the offer which now seems likely that the IPO could be pushed to the high end of the range, right now that would be about $30/ share.
This is a ton of marketing hype, and it’s working. It seems that people don’t care what the reality is and how much more tax payers have given GM in a new effective sweetheart bailout program to help the automaker show positive growth right before its big IPO.
This new bailout program by the Obama Administration allows GM to not have to pay upwards of $50 Billion in future taxes for the next 20 years (Source: Reuters). The result of this has helped GM to show a recent profit of $2 Billion to further prop up the hype in the new IPO.
IPO Predictions Update
The stock is likely to pop up on the first day or two on the press coverage and hype. I expect the fanfare to continue, then drop off within a week after the IPO. Then GM will have to compete like a real company. With government (tax payer) continued support, GM should have a financial advantage, but the key will be, can they sell cars against their competitors without government support, and can they make money in a major recession? This undoubtedly will take some time.
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