Is it true in assuming that if GM goes through with bankruptcy and the gov. bails them out that the stock price should move up a good deal because their book value is around $38-39 per share?? Or am I putting too much emphasis on BV?
Right now GM stock is operating in an "inverse bubble." ( i know there is no such thing in reality...) It is very sesitive to news. The price of the stock has no direct relation to anything concrete right now. In other words, it could do anything.
but i'm asking in a post-bankruptcy situation, LT. In theory, if the company was "liquidated" each share would be worth ~$39. no? so i'm asking, shouldnt this be a perfect time to buy for long-term? The only thing that I could think of that would hinder the long term, is that GM tries to gut it out and slowly loses equity over a year or two. thoughts?
In a bk, the secured creditors will be compensated minimally (compared with investment)...common share holders are the last in line to get anything.
ok i guess i don't understand the fundamentals that lead to some stock rises when a company goes bankrupt and debt is erased.
Where do you get the $39 from? If it were liquidated you would have a company with 276 Billion in debt with negative earnings. Enterprise value of 275 billion might cover the debt I don't know but in the best case scenario the only value is the stock price and if it goes to .... Get what I mean. The only way for GM is to cut cost and pull themselves back up with earnings.