February 22nd, 2009 16:40 EST
Stock in General Motors Fell to Their Lowest Since 1934
With record drops in shares across the S&P, NASDAQ, and Dow Jones, GM stocks plummeted to the low of $1.52 a share around mid-day on Friday before reemerging at $1.82 by the day`s close. This comes as the result of investors` lingering doubts over the automaker`s future as well the sweeping effect on most stocks across the trading floor.
From figures lent from the Center for Research in Security Prices at the University of Chicago, the low matched the mark set on July 26, 1934 during the Great Depression. Naturally, these figures are adjusted to reflect inflation and other financial changes.
Last month, GM stocks were worth $3.50, and a year ago, they were worth $25.54. GM has seen the demand for their new vehicles swan dive as consumers are more prone to invest in used cars these days. Subsequently, the market took that fact into account in the last four quarters.
GM isn`t the only ones in the U.S. automotive industry struggling, as stimulus money is expected to keep all the major American car manufacturers afloat, but for how long?
GM has asked the Federal government for a lifeline to the tune of 30 billion dollars to avert from filing for bankruptcy protection: an amount 12 billion more than previously requested by the company. This comes even after General Motors had already received 13.4 billion of the bailout money, included in the final estimated figure. To cut their losses, the company is planning to shed 47,000 jobs from plants around the globe, and to shut down 5 more factories in the United States. As a further measure for GM, Saab, at the behest of its parent company, went into bankruptcy protection on Friday allowing GM time to strip the subsidiary of its assets.
No amount of bailout money and no form of bankruptcy protection will make their stocks valuable again, analysts declare regarding the crippling automaker.
According to Joseph C. Amaturo from the Buckingham Research Group, GM`s best course of action is to declare Chapter 11 bankruptcy to offset the costs to their investors as well as to the average taxpayer. Further more, he called the company`s restructuring plan futile since it won`t decrease any of their outstanding debts, erase any of their legacy costs, or make labor agreements more competitive.