initial public offerings (IPOs) trading on American exchanges

Friday, March 18, 2011

GM goes below IPO price

The chart below compares the performance of GM and the Standard & Poor’s 500 Index since Nov. 17, when the shares were sold at $33 apiece as part of an initial public offering. The sale of common and preferred stock totaled $23.1 billion.

Since the beginning of last week, GM has changed hands for less than its IPO price. The stock reached bottom three days ago at $30.65, down 22 percent from its peak on Jan. 6.

“GM needs to earn back investors’ trust,” H. Peter Nesvold, an analyst at Jefferies & Co., wrote today in a report.
Buyer incentives rose in January and February, causing concern that the automaker may be like “a ‘yo-yo dieter’ falling back into bad habits.”
Nesvold, who made Zacks Investment Research’s All-Star Analyst Survey list while at Bear Stearns Cos., began coverage with a “hold” rating. He sees the stock ending the year at $34, the lowest price estimate of analysts surveyed by Bloomberg.

GM’s IPO followed a bankruptcy reorganization with $49.5 billion in government aid. The U.S. Treasury owns 33 percent of the automaker’s shares and needs to sell them for an average of $53.07 each to break even, according to a GM regulatory filing and data compiled by Bloomberg.

No comments:

Post a Comment