So.....What will happen to my shares of GM stock if GM decides to go into bankruptcy?

What about if GM restructures into two different companies?

 

They go to zero, why on earth is anyone still holding GM stock?

 

What would happen to your GM stock if GM goes into bankruptcy?

1. The stock certificates make great wallpaper.

2. The stock certificates make great birdcage liner.

3. If you have alot of shares, you can incorperate them in with Monoply.

4. They can be shreaded and used to make pillow stuffing.

5. Finally, you could attempt to find someone who ignored GM's financial status, or someone who would see GM's impossible debt load and still be completely oblivious as to what GM's average annual net earnings/losses have run the past decade (arguably, the best case scenario possible) and loaded up on GM stocks to "show support" or because they simply "believed" in GM and sell those stocks to them.


Seriously though, people just don't buy stock in a company that has more debt than it can dig out of in 20 years with 7 divisions in a booming economy while that same company is talking about closing divisions, lenders have dried up, and that same company is delusional enough to still believe it can either grow or hold onto market share.

If GM divides into 2 different companies, it's not going to matter. There's plenty of people, companies, and entities that are well ahead of you in any potential money trough. Think of Enron.... but without anyone doing jail time. GM stock right now is worth $1.69 when just over 15 months ago, it was pushing $50.

The day it files for bankruptcy, it's price will go below $1.

Take it as an expensive lesson, write it off on your income tax, and move on, or sit on it, will it to your grandkids, and maybe it might recover to that $50 someday.

Sometimes something gets so bad that keeping it or selling it is equally bad.

 

Just speaking for myself --- because you buy it at a certain price and don't want to sell it at a loss. You maintain hope that it will recover, but it gets so low that you simply
refuse to just dump it.

 

I didn't realize that bankruptcy included shedding all stock value?

I realize now is a crazy time to own GM stock, but will it truly go to zero by default when they declare bankruptcy, or will it just drop, and take a long time to recover?

IIRC when K-Mart was doing the bankruptcy thing their stock got down to single digit cents but never hit zero.

 

http://en.wikipedia.org/wiki/Chapter...tes_Code#Stock

 

Unfortunately I've been there and know how you feel.

 

Yup, same here.

 

The big difference is that K-Mart still had value, and it's debtload wasn't beyond hopeless.

On a great year in a booming economy with 7 divisions, I don't believe GM ever made more than 4 billion annually in the past decade....Yet it ran up over 60 billion in debt.

That means it would take an impossible economic boom of at least 15 years, and GM to instantly return to at least 30% market share to recover.

More realistically, GM was beyond hopeless financially. GM till just recently was the globe's biggest automaker, yet it still ran up a debt up to 12 times the company's value..... K-Mart wasn't anywhere near that bad.

Although I was joking about what you could do with your GM stock if it goes bankrupt, the basis of what I said holds true.

Any value left at General Motors will go first to those who GM ran up a bill with. GM owes at least 60 billion. Market value is about 1 billion. Every single cent of cash GM has right now is taxpayer money that simply will return to the government plus the value of property equal to what GM has used already.

Stockholders will be last to get any value from their holdings.

In short, you should bless your lucky stars that as a stockholder (and therfore part owner), laws prevent you from having to contribute paying for GM's debt. Technically, you can actually say that your GM stock has negative value.

To say your stock would be worthless would be a gross understatement.

 

How much stock do you have?

 

I currently have stock with Daimler & Microsoft.

The Daimler stock started off as Chrysler stock I bought after I returned from the original "Desert Storm" war back in 1991. I started off with $5,000 back then, and between stock splits and Chrysler's blastoff in value in the 1990s, cumulating with the stratospheric climb when it merged with Merceds Benz, I made out like a bandit. I also cashed in large portions of stock over the years as backup cash and to help fund living in Australia for a year.

Microsoft I sat on, and is the long term stock. The money I made there pretty much balences out the bloodbath I took on Planet Hollywood and Qualcomm back at the end of the 90s.


Right now Daimler shares are worth around $36.
The 52 week high was $82.

That compares to $1.62 and about 25 for GM.

Ford, $5.08 currently and $8.68 52 week high.

I'm not as happy as Ford stockholders, but I'm not watching retirement money turn to dirt as GM stockholders are.


I treat how much I own as my personal business, but it's still quite enough to buy pretty much any car I want (except a new CTSv) should I be dumb enough to ignore the future and cash most everything in.

 

I was asking the op, maybe I'll trade him a jetski for it.

 

This is the one reason I had assumed the government would keep GM out of bankruptcy. I figured too many retirement funds, investors, and so forth held the stock for it to be allowed to be come simply worthless.

What I don't understand is how anyone could consider government bail anything but an unmitigated disaster? I mean now that tax payers have invested in a company...but are still forcing it into bankruptcy. On top of that in the bankruptcy a lot of wealth will simply vanish from any of the stake holders, and jobs will be lost lowering tax revenue?

I mean wouldn't the smart thing to do, be create a plan that fixes GM's debt load and allows it to compete competitivley?

 

It will have no value at the end of the bankruptcy. It's common for companies in the process of bankruptcy to have a value of 10 cents or less. I'm not sure why -- probably because people spend a bit of money hoping for the miracle recovery.

 

It's quite a bit more complicated than that. There's no way to tackle this subject in any reasonable way in this forum.

The short answer is that GM has essentially no value right now (actually, it's really a negative value). There's no magic way to give it value.

And to be clear, the government is not forcing GM into bankruptcy. It's placing conditions on a loan that would keep GM from bankruptcy. That's a very reasonable thing to do. I don't want government to keep plowing more money in without conditions; I want the government to have a chance of getting the money back.