What's a matter Biff, afraid to read the rest?
So why does the Treasury say that it's still out over $25 billion?
Several reasons, but here's a big one: GM's stock price hasn't played along.
Get the Jumper Cables
GM's "payment" to the Feds included stock. A
lot of stock. The government has sold some, but it still owns 500 million shares of General Motors.
GM's stock rose to almost $39 after its return to the public markets in late 2010, but it's been all downhill since. Right now, GM is stuck around $20 to $21 a share, a range it has been in for a while.
Here's the problem: For the Feds to break even on the bailout, the shares of GM still owned by the Treasury have to get up to
around $53 a share.
That's not happening -- at least, not any time soon. That's not exactly GM's fault: Believe it or not, CEO Dan Akerson and his team are -- for the most part -- doing a solid job of getting GM's house in order.
Eventually, GM's stock price should reflect the progress they're making. But even though Akerson is doing pretty well, and even though GM's profits in 2011 were at an all-time high, there are several factors holding back GM's stock:
- Europe is a mess. Like rival Ford (F), GM is losing big bucks in Europe: $361 million in the second quarter alone, thanks to ongoing economic troubles that have clobbered car sales. A turnaround is coming, but it could take a few years. Meanwhile, losses could continue, and investors hate that.
- GM's losing ground at home. GM's share of its most important and profitable market -- the USA -- has fallen in recent months, a fact that might have contributed to the recent ouster of its global marketing chief. Upcoming new cars and trucks should help, but they're a year or two off. Meanwhile, discounts are up, sales are down, profits aren't what they could be, and Wall Street remains concerned.
- The Fed might dump its investment. 500 million shares is a lot of stock. If the government decides to bail on its investment after the election, the price will drop further as all of those shares hit the market. That possibility makes investors nervous.
GM has other problems that worry investors, but what they all have in common is that they're likely to be resolved in time -- but it could take a few years. Eventually, GM's share price should rise quite a bit -- in fact, for a long-term investor, GM stock might be a pretty good buy right now.
But taxpayers -- or at least, the Treasury Department -- may decide not to wait for that likely-but-not-certain rise. And the way things look now, that means a big loss is likely.
If you don't like that you can read this:
http://www.freeinews.com/automotive...markets-lack-of-new-vehicles-could-spell-doom
