GM's IPO Hurdle: Investors Don't Want Shares (GM, F)

GM’s largest problem for the IPO seems to be investor skepticism.  Late yesterday came the SEC filing paperwork from General Motors for its long awaited initial public offering.  There has been a debate real debate over how the investment bankers should handle the IPO process for the public considering that it was the common taxpayer money that bailed out ‘Government Motors.”  Ford Motor Co. (NYSE: F) will at some point later in 2010 lose its status as the sole public Big Three US auto makers.

The debate that has not been adequately debated is whether or not there is going to be adequate demand from investors.  Usually investors want to get initial public offering prices.  The problem at GM for this IPO is that a poll we took does not indicate that there is much demand for the stock even though this will be the biggest IPO in history.

As of 7:00 AM EST on August 19, 2010, our poll we have taken over the last couple of days generated 1,233 responses.  24/7 Wall St. demographics are not necessarily including everyone in America, but the demographic data does generally lean toward an investor, finance, or managerial reader base.  Of the 1,233 votes in the anonymous poll, the results show that more DID NOT WANT GM SHARES than those who DO want shares.  Because we allowed for an “Undecided” vote, neither Yes nor NO had a true majority and the No’s won.

Poll Results from 1,233 responses are as follows (again, as of 7:00 AM on Aug. 19):

• I DON’T want to buy GM shares generated 548 votes for a 44.4% tally.
• I DO want to buy GM shares generated 531 votes for a 43.1% tally.
• I am UNDECIDED generated 154 votes for a 12.5% tally.

Ford Motor Co. (NYSE: F) managed to escape the Government Motors mantra and its stock is now at $12.20 versus a 52-week trading range of $6.61 to $14.57.  The public has seemed to favor Ford as a brand now.  There is more than coincidence here.

The issue in trusting a poll right now is that the terms are not known.  Making projections for GM is not easy, and the price and share sales for the common and preferred stock are unknown.  The attitude may change as the IPO gets closer.  Or it may not.

You can read the IPO filing summary or cast a vote of your own.

JON C. OGG