Wednesday, December 24, 2008

GM - Sell @ 3.00 USD

These guys are goners. It's only a matter of time. Although they have the right idea now (developing new technologies), it's too little too late (even with the Government loan / warrants). I was discussing with someone who was watching the stock who said that that surest sign that the company was on it's way out was when it started offering 0% financing a few years ago. Now there are reports of dealers giving stock away or closing shop. Even if the economy was stronger, I don't think there is enough momentum to save GM (even with gas prices at an incredible low and dropping). It doesn't matter that gas is cheap so much as people are worried about their job security and incomes.

Also a great deal of GM's business is in the financial arm of GMAC (which is holding Ditech, a mortgage refinancing company) which is taking a heavy beating also. It isn't a good sign when your company is on a banned list for shortselling.

I think almost everyone knows that this company is on its way out and no one would be foolish enough as to dismiss the deep ramifications of that (Windsor becoming like Detroit), however, the question shouldn't be "How can we save GM?" but rather "How are we going to move on after it's gone?"

Rating: Sell

No comments: