GM’s New Fleet Is Drowning Out Haunting Bailout Memories
It was just last week that we reported General Motors Co.’s (NYSE:GM) shares topping its initial public offering price for the first time in two years. As the U.S Treasury sells down its stake and GM prepares to return to the Standard & Poor’s 500 Index, its share price continues to rise, offering the validation the automaker needs to “keep on strategy, and keep doing what we’re doing,” Mark Reuss, president of GM North, told reporters Monday in Detroit.
Optimism about Detroit-based GM’s “product cycle sweet spot” continues to grow, as it plans to introduce 20 new vehicles in the U.S. this year. Its rising share price reflects investor confidence. GM rose 0.84 percent to 33.70 as of 430 p.m. Monday, and according to data compiled by Bloomberg, the shares are rated Buy by 79 percent of analysts, and holding by the remaining 21 percent.
Chief Executive Officer Dan Akerson told reporters last week that the automaker is working toward more mid-decade goals. By sustaining traction and stemming loss in Europe, developing a strategy for growth in China, and boosting North American operating margin to 10 percent, the company expects continued, albeit modest, improvement. It is committed to slowly but surely changing GM’s image and escaping the “Government Motors” critique.
Ever since last July when GM reached a closing low of $18.80, it has made a slow rebound, even becoming an issue in the U.S. November 2012 presidential election, when Republican challenger Mitt Romney criticized President Barack Obama’s $49.5 billion bailout in 2009. Shutting out the criticism, in December, GM stock climbed to its highest price in 10 years, and it announced that it would spend $5.5 billion to buy back 200 million shares from the U.S. treasury. As of April 1, the Treasury still held 241.7 million shares, but it reported in December that it would fully withdraw from its GM investments by April 2014
Although GM has seen setbacks since then, including a first-quarter loss in Europe reported on May 2, it is confident that its new strategies will help it to cut costs and stem further losses. If the automaker can rejoin the S&P 500, it will be a momentous milestone that will help GM, the Treasury, and the President breathe a sigh of relief.
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