by Dave Goodboy
The much anticipated General Motors (NYSE: GM) IPO hit the street late yesterday to incredible fan fare. The IPO was priced at $33/share near the top of its expected range. Shares began trading today under the tried and true ticker symbol GM. The number of shares issued was increased to 478 million, up from the original figure of 365 million. Valued at $20.1 billion, this IPO's worth could be increased to $23.1 billion earning GM a place in the record books as the largest IPO in history. Stocks are rejoicing over GM’s return into the public's hands. Index futures were trading sharply higher on the pre open, despite the lack luster economy, forecasting the likely huge success of the IPO.
GM CEO Dan Akerson triumphantly told the Detroit Free Press, "We're at a milestone date today, it's a rebirth of the company. I can't tell you how exciting this has been for the average employee ... The resiliency of our employee base has been really inspiring to me. ... The company is fundamentally in great shape, and it's a point of pride for the company. ... It's a great day for the country."
Although this IPO signals a new era in GM’s bankruptcy in early 2009, not everyone is bullish. The truth is, the government will still be involved with the company, albeit at a much lower percentage. This heavy remaining government involvement may force the automaker to work on less then profitable green and fuel saving cars to apease political pressures. In addition, GM readily admits that its financial controls are not up to par yet. Whoa! Any other company saying this pre-IPO would be trashed on the Street; however, this fact seems ignored thus far in this case.
I am expecting a gangbuster type upmove out of the gate due to the hype today. However, I fully anticipate a very volatile ride in this IPO into the future. It is only suitable for nimble day traders and those with very long-term horizons. Everyone else would be wise to sit this one out.
Disclosure: no positions
Disclosure: no position