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Thread: GM shares fall below $10 for the first time in 60 years

  1. #1
    Vulture of The Western World Eric's Avatar
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    GM shares fall below $10 for the first time in 60 years

    Shares of General Motors Corp. plunged Wednesday to close below $10 for the first time in more than half a century, as investors shrugged off better-than-expected June sales and analysts raised concerns about the company's cash needs.

    GM shares fell $1.77, or 15.1 percent, to close at $9.98. Their session low of $9.96 marked their lowest point since Sept. 13, 1954, when they hit $9.92, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.

    On Tuesday, GM shares surged as much as 12 percent. The automaker reported an 18.2 percent drop in sales from a year ago but retained its traditional U.S. sales lead over Toyota Motor Corp., which posted a 21.4 percent decline.

    Analysts, who had expected a much steeper drop, said GM's sales were able to outpace those of most other automakers because of late-month incentives and double-digit jumps in demand for certain small and midsize cars.

    Deutsche Bank's Rod Lache said that while previous incentive programs have resulted in temporary boosts to GM's market share, they have generally been followed by drops in later months.

    "If history is any guide, we would expect GM's sales to experience 'payback' for the pulled forward sales in the months ahead," Lache wrote in a note to investors.

    The analyst said GM's market share could drop back to the 19 percent to 20 percent range, down from its June level of 22.1 percent.

    Meanwhile, Citi Investment Research analyst Itay Michaeli slashed his price target on GM shares to $14 from $21, citing liquidity fears.

    "While we do not believe GM is facing an immediate cash crunch, the urgency to shore up liquidity to navigate through a difficult 2008-09 has risen significantly in recent months," Michaeli said in a note to clients. He kept a "Hold" rating.

    Ford Motor Co. didn't fare as well as its crosstown rival. The Dearborn, Mich.-based automaker said its June sales plunged 27.9 percent, blaming surging gas prices for knocking its light truck sales down 35.4 percent.

    Ford shares fell 35 cents, or 7.4 percent, Wednesday to close at $4.36, passing a multidecade low of $4.41 set the day before.

    Despite the sales drop, Lache said Ford remains the best positioned among the U.S.-based automakers and has the required cash to ride out a drawn out industrywide slump.

    "In addition, we continue to believe that Ford is the most 'fixable' of the three U.S. automakers - it has effectively consolidated itself to two brands, and we still see considerable cost savings opportunities within the enterprise," Lache said.

    June was a dismal month for the industry overall, which posted a 18.3 percent sales drop, according to Autodata Corp. Only Honda, whose lineup is tilted toward smaller and more fuel-efficient cars, managed to report a sales increase for June - slightly over 1 percent.

    The automakers' shares have taken a beating in recent weeks, hurt by rising oil prices and a weak U.S. economy, along with a shift in consumer demand away from gas guzzling light trucks and toward smaller, more fuel-efficient cars and crossovers.

  2. #2
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    Re: GM shares fall below $10 for the first time in 60 years

    You know, if I thought they (or Ford, which is trading around $4.33 a share) could pull it out, I'd be buying them up like crazy.

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

  3. #3
    Vulture of The Western World Eric's Avatar
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    Re: GM shares fall below $10 for the first time in 60 years

    Quote Originally Posted by chiph
    You know, if I thought they (or Ford, which is trading around $4.33 a share) could pull it out, I'd be buying them up like crazy.

    Chip H.
    My thought also - but I really think there is a good chance they will go belly up. The economy is in the crapper and GM can't withstand another year or three of no profits. Chrysler is even worse. I think Cerberus will part-out the remains by spring.




  4. #4

    Re: GM shares fall below $10 for the first time in 60 years

    I'd buy GM stock right now, if I had the cash around.
    but I do have faith in them, lol, and maybe thats rare
    '06 Lotus Elise, '07 Saturn Sky Redline

  5. #5
    Vulture of The Western World Eric's Avatar
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    Re: GM shares fall below $10 for the first time in 60 years

    Quote Originally Posted by damen
    I'd buy GM stock right now, if I had the cash around.
    but I do have faith in them, lol, and maybe thats rare
    As I see it, GM is in desperate straits unless gas prices fall back to $3 or less - and the value of the dollar stabilizes... However, I see no indication that either is going to happen within the near-term. And GM's product portfolio is still massively tilted toward vehicles that are unsustainable in the current market. The debt-financed joyride is over. GM's sales have dropped by almost 20 percent in just the past few months. Most of this is trucks/SUVs. But can GM make that back? With what? Meanwhile, it is still trucking along with 6 full line divisions... with roughly the same market share as Toyota (which has only three divisions, all of which are profitable).

    It is not sustainable. I'd sooner buy Confederate dollars than GM stock......







  6. #6

    Re: GM shares fall below $10 for the first time in 60 years

    but as always you assume nothing changes
    you're assuming that GM doesnt drop, for example, Buick - and perhaps Pontiac.
    you're assuming that the Volt doesnt do well (and yes, I've read your article. I disagree with your fundamental logic on that one)
    you're assuming that GM sits on its heels and does nothing

    Now, GM isnt know for being fast moving or particularly bright, I will grant you. But they're not so blind that they dont see whats coming, and I think they will rise to the challenge
    '06 Lotus Elise, '07 Saturn Sky Redline

  7. #7
    Vulture of The Western World Eric's Avatar
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    Re: GM shares fall below $10 for the first time in 60 years

    Quote Originally Posted by damen
    but as always you assume nothing changes
    you're assuming that GM doesnt drop, for example, Buick - and perhaps Pontiac.
    you're assuming that the Volt doesnt do well (and yes, I've read your article. I disagree with your fundamental logic on that one)
    you're assuming that GM sits on its heels and does nothing

    Now, GM isnt know for being fast moving or particularly bright, I will grant you. But they're not so blind that they dont see whats coming, and I think they will rise to the challenge
    But do they have the time?

    They really screwed up not seeing this coming ("this" being rising fuel prices; "this" being the need to do something about superfluous brands/models).

    I don't see GM being in a position to lose money for another 2-3 years (which seems very likely to me).

    As for the Volt: Maybe you can change my mind. How does a $40k "economy" car make sense? Who buys a $40k Chevy to begin with?



  8. #8

    Re: GM shares fall below $10 for the first time in 60 years

    you mean other than the corvette owners?

    I dont understand why you're taking the Volt as an economy car. From the press events I've been to, I dont think that's what GM is pitching it as. Think of all the movie stars who own a Prius. This is a status symbol. Want to show up that irritating holier than thou neighbor with a Prius? Get a Volt! It gets HUGELY better mileage than the Prius (which is actually pretty dismal, but thats another story) and you have the bragging rights of being fully electric (yes with a gas engine for longer trips, I know). It is all about marketing.
    '06 Lotus Elise, '07 Saturn Sky Redline

  9. #9
    DonTom
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    Re: GM shares fall below $10 for the first time in 60 years

    "I'd buy GM stock right now, if I had the cash around."

    I was thinking the same thing. I expect them to recover, just not right away. Seems like a perfect time to buy low so we can sell high in a few years.

    There will be some type of fix to get by the hard times for now, IMO.

    -Don-

  10. #10
    Vulture of The Western World Eric's Avatar
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    Re: GM shares fall below $10 for the first time in 60 years

    "you mean other than the corvette owners?"

    Yes. Corvette is unique; and arguably, it's out of place in the Chevy lineup nowadays as it has become much more expensive (and elite) than any other Chevy model. As discussed before, a large chunk of the people who buy $40k and up cars would not buy such a car from Chevy because of the plebian nature of Chevy dealerships. It's like spending $500k to buy a really nice house.... in a development surrounded by $175k townhouses.

    "I dont understand why you're taking the Volt as an economy car."

    Because the whole point is to save gas. Hence "economy." Otherwise, who cares? It's not fast, it's not high-performance or luxurious... the primary object/reason to buy the thing is its potentially very high efficiency. But at $40k-up, who cares about efficiency? Maybe a few rich celebs. But otherwise? If Leonardo, et al, buy the thing - great. But for it to make sense as a mass market car, it has to be something the masses can afford, yes? How many Average Joes and Janes - the people who worry about fuel economy - can afford a $40k car? Why would these people buy a $40k Volt when they can buy a $16k economy car? Are they going to pull the additional $25k out of their asses? If not, then they have to finance the purchase. And a $40k new car means a monthly payment of $500-$600. If you can afford that, "gas mileage" is not a big concern.... is it?

    "Get a Volt! It gets HUGELY better mileage than the Prius... "

    Sure - but it also costs twice as much! That extra $20k in your pocket is enough to buy free gas for 5-6 years at least....




  11. #11
    Vulture of The Western World Eric's Avatar
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    Re: GM shares fall below $10 for the first time in 60 years

    Quote Originally Posted by DonTom
    "I'd buy GM stock right now, if I had the cash around."

    I was thinking the same thing. I expect them to recover, just not right away. Seems like a perfect time to buy low so we can sell high in a few years.

    There will be some type of fix to get by the hard times for now, IMO.

    -Don-
    The "fix" may be dissolution of the company....

  12. #12
    DonTom
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    Re: GM shares fall below $10 for the first time in 60 years

    "The "fix" may be dissolution of the company...."

    I know. But I just don't expect that to happen. They will get bailed out somehow just as Chrysler did years ago.

    -Don-

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