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Price of GM stock too high, experts say

Posted Thursday, May 7, 2009, 11:33 am in Employee News

As General Motors Corp. approaches a June 1 deadline to restructure, stockholders, including thousands of company retirees and workers in Michigan, are facing yet another painful hit, regardless of whether GM avoids bankruptcy, the Detroit Free Press reported.

Simply put, GM stock, a longtime blue chip that still traded at more than $20 a share a year ago, is overpriced—even at its Wednesday closing price of $1.66 a share, experts told the paper. The current price suggests GM is worth $1 billion—the price per share times the total number of shares outstanding.

But under restructuring scenarios presented by both GM and its debt holders, current stockholders would be left with just a 1 percent stake in GM, the Free Press said At $1.66 a share, that suggests GM is worth $100 billion, the paper added. Experts say there’s no way the new GM would be worth that much, which means the price should fall even more, the story said. (Detroit Free Press)
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