GM stock hits new lows, auto stocks suffer

GM stock hits new lows, auto stocks suffer http://www.autonews.com/apps/pbcs.dll/article?AID=/20080618/ANA02/864844823/1078
General Motors' stock price set another record low this morning, falling
6.7 percent to $14.75. It helped drag down the Dow Jones Industrial Average by more than 130 points today.
GM shares closed at $14.88 a share, down 5.9 percent. GM shares have lost almost half of their value since Feb 1, when they closed at $28.98. That is roughly $8 billion in lost market capitalization.
The decline in GM's stock price comes on the same day a Deutsche Bank analyst cut his 2008 U.S. light-vehicle sales forecast and said GM probably will need an aggressive restructuring plan so it could borrow money to cover its spending.
Analyst Rod Lache wrote in a research note that he expected U.S. light-vehicle sales of 14.5 million in 2008, down from his previous estimate of 14.9 million as dealers and automakers struggle to meet rapidly shifting customer demand.
Another analyst speculated that GM would be borrowing more money.
"GM is burning cash fast, but it (unlike Ford) still has many unencumbered assets that can be borrowed against," JP Morgan analyst Himanshu Patel said in a note for clients.
"The bank debt market is expensive but open, and we believe GM, most likely before year end and perhaps as early as the third quarter, may announce a secured bank deal," he said.
Patel estimated GM could borrow up to $10 billion, secured by assets such as its overseas operations, trademarks for brands and inventories.
Other players in the auto industry also saw their shares fall sharply. Ford Motor Co. shares fell 6 percent to close at $6.20, a slight recovery from earlier in the day.
First-quarter earnings news from CarMax Inc. also helped drag down the sector. CarMax saw its earnings decline by more than half as customers bought fewer light trucks. CarMax shares closed down 13.3 percent, at $15.91.
Shares of American Axle & Manufacturing Holdings Inc. hit their lowest price since 2001, touching $11.76 during the day but rising slightly to close at $11.81. Dealership groups Lithia Motors Inc. and Sonic Automotive Inc. each hit52-week lows. Lithia fell to $5.72 but closed slightly higher. Sonic fell 5.9 percent to $13.86.
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Hogwash the only way it would be "lost capitalization".would be if the stock being sold was a NEW issue. What many forget for every seller there is a buyer at the STOCK EXCHANGE

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It does limit GMs ability to raise new capital by issuing stock. Any stock GM is holding in it's own account is also affecred. And of course, the big hit is to executive compensation. A lot of stock options are worthless at the current stock prices.
Ed
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GM is not currently offing stock

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Mike hunt wrote:

Like P.T. Barnum said: "There is a sucker born every minute".
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You bet, they can be found every day paying way too much to buy an under powered 4cy Camry, thinking they will save money on fuel. CR recently point out, in an article published in the Tribune Newspapers that, according to their subscribers, the 4cy Camry average only 24 MPG. Buyers should be leery of trading in a perfectly good SUV that they own, on an under powered car like the 4cy Camry LOL

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Mike hunt wrote:

They won't be driving that SUV very long-something about owing more than its worth and filing for bankruptcy after a few fill-ups. Bye-bye SUV/Truck market.
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Get real. Apparently you do not earn more than 50K or you would know people that can afford to operate and own 50K SUVs are not too concerned about paying a $1 or so more a gallon for fuel to operate the type of vehicle they need and want. Sales of trucks and SUVs are down, but buyers who want and need them are still buying them by the thousands ;)

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Mike hunt wrote:

Not for long Mikey:
GM big truck plans on hold http://tinyurl.com/5kc52x
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And there is also a useless Troll born at around the same time, Jim...Don't let the door hit you in the ass on the way out...
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A lot of stocks have suffered, and there is great unease in the market. At times like these, one has to be very careful with his money. At my age, I cannot afford to gamble on long shots...
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