General Motors Out of Bankruptcy One Year and Rushing to Have an IPO; Edmunds.com Comments
SANTA MONICA, Calif. — July 14, 2010 — Saturday marked the one-year anniversary of General Motors' emergence from bankruptcy. The company has come a long way, and is moving quickly down the road to create an initial public offering (IPO) for its new stock. Edmunds.com, the premier online resource for automotive information, recognizes the progress that has been made but questions the rush to have an IPO.
"This is certainly not the economic climate in which I'd want to have an IPO since it is likely to reduce the initial valuation of the stock. Negativity about the economy continues to swirl about and the psychological effect is putting a damper on all things it touches; what may be the most significant IPO in history will not be immune," stated Edmunds.com CEO Jeremy Anwyl. "One can't help but wonder: what is the rush?"
In a report on AutoObserver.com, Senior Editor Bill Visnic and Edmunds.com analysts explore the following possibilities:
- Is there pressure from current shareholders like the government and the UAW VEBA trust who are anxious to liquidate their shares?
- Is GM trying to go public while the company has a fair amount of positive momentum in anticipation that the future may not be quite as positive?
- Is the timing political, targeted to happen before the next election so that the current administration can take credit for seeing the process from start to finish?
"Regardless of whether any of these possibilities hold any weight, GM executives must have reasons for expediting the IPO," stated Anwyl. "The company would benefit from clarifying its reasoning publicly and openly in order to build trust and credibility and to resolve public curiosity."
"When GM stock is offered, the US government can sell all or a portion of its 60.8% stake in the 'new' GM. This would free up TARP funds that could be applied to something else, like unemployment benefits which may provide a measurable boost to the economy," Edmunds.com Senior Economist Rebecca Braeu, PhD told AutoObserver.com. "The big question is whether the government will receive payback of its $49.5 billion investment in GM."
About Edmunds.com, Inc. (http://www.edmunds.com/about/)
Edmunds.com Inc. publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive information, launched in 1995 as the first automotive information Web site. Its mobile site, accessible from any smartphone at www.edmunds.com, makes car pricing and other research tools available for car shoppers at dealerships and otherwise on the go. InsideLine.com is the most-read automotive enthusiast Web site. Its mobile site, accessible from any smartphone at www.insideline.com, features the wireless Web's highest quality car photos and videos. CarSpace is the most established automotive social networking Web site. AutoObserver.com provides insightful automotive industry commentary and analysis. Edmunds.com Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit. Follow Edmunds.com on Twitter@edmunds and fan Edmunds.com on Facebook at http://www.facebook.com/edmunds.