Investors are anxiously waiting for the General Motors IPO and many have been wondering what the GM stock price will be. Well, GM chairman Ed Whitacre says that it will probably be anywhere from $20 to $25 per share. Whitacre also said that the public offering is scheduled for November. Plans won't be finalized until the company gets approval from U.S. regulators. Whitacre said that he expects the IPO to be successful because GM is making a profit and that it has good products.
The U.S. government currently owns 61 percent of the Detroit auto maker. Other groups that own shares of GM include the United Autoworkers Union, the governments of Canada and Ontario and GM bondholders. The IPO will help to break GM from control by the feds and is also expected to help the government recoup some of the money it had invested in the auto maker during the bailout.
The government owns more than 300 million shares of GM stock. It is uncertain right now how many of those shares the government will offer in the initial stock sale. Many, including the current CEO of GM, Dan Akerson, said that it will take many years for the government to sell all of its shares in the company.
The plan now calls for the government to sell a small amount of shares, then gradually sell more in follow up sales. The Canadian and Ontario governments, the union and old bondholders are expected to sell shares during the IPO as well.
Reports say that General Motors has about 550 million shares outstanding and a government bailout watchdog group said that each share is worth about $133.78. So to get the price down to $20-$25 GM would have to offer more shares. This action is called a split and would give share holders about five to seven new shares for every share they have.
Analysts say that market conditions could change, causing GM to lower the price. And they say that some investors are comparing GM's share price to Ford, which closed at $13.64 on Wednesday, October 13. It is expected that GM will be selling preferred shares to raise money to pay its debts and fund pension plans. General Motors made $2.2 billion in the first half of this year and is expected to announce that it made a profit for the third straight quarter in November.
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