GM makes return to stock market
Friday, November 19, 2010
After years of turmoil and failure, General Motors made a smooth return to the stock market Thursday, posting a modest gain in shares in a massive public offering that President Obama touted as proof of the auto industry bailout's success.
GM's initial public offering was as hotly anticipated as that of a buzzy tech start-up - not only because of the auto giant's iconic status and the deal's historic size, but also because its share price will determine how much of the $50 billion in taxpayer money spent on its rescue will be recouped.
The stock, which resumed trading under its old ticker, "GM," closed at $34.19, up 3.6 percent from the offering price of $33 a share. Altogether, the company raised $20.1 billion through the IPO, making it the biggest in U.S. history.
On Wall Street, where GM officials rang the bell to open trading on the New York Stock Exchange, the offering helped lift the broader U.S. market, with the Standard & Poor's 500-stock index rising 1.5 percent to close at 1196.69.
For the president, the IPO marked a welcome change to the continual stream of bad economic news that has weighed on his political standing. After markets closed, Obama hailed the offering as vindication of his administration's rescue of GM.
"There were plenty of doubters and naysayers who said it couldn't be done," he said, adding that the U.S. auto industry "is once again on the rise."
Doubts remain about how much taxpayer money can be recovered. The Treasury nearly halved its 61 percent stake in GM on Wednesday, raising at least $11.8 billion. It now must wait six months before shedding any more stock. The government would have to sell the remainder of its stake for about $53 a share to break even.
"American taxpayers are now positioned to recover more than my administration invested in GM," Obama said.
Surge in early trading
Before Thursday, some questioned whether the U.S. Treasury, in its eagerness to slough off its stake, rushed GM into an IPO and sold its shares too soon. But based on the results, the government didn't leave much money on the table.
GM shares jumped in the first few minutes of trading, to $35.99, their peak for the day, and then sloped down slightly through the afternoon.
The lack of volatility indicates that GM priced the IPO well, analysts said. "Seems like they were pretty much on the mark to me," said Bill Visnic, a senior editor at Edmunds.com.
"I think this thing has worked out as well as anybody would have imagined back then," said Steven Rattner, who served as the Obama administration's "car czar" and oversaw much of the restructuring.