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mikecart1 (74.18)

How To Correctly Play This Upcoming IPO of the Year



August 23, 2010 – Comments (14) | RELATED TICKERS: GM , TSLA , MSFT

So this may be the year that 10 years from now you will either remember in glory or remember in pain.  The company that comes back to life once again.  GM is that company and it isn't the old GM, but the new and improved GM.  The new and improved car company of America.  Of course you can always ignore this IPO like many IPOs before it.  But is it really wise? 

Won't get into specifics but will break this IPO down qualitatively.  We know GM has a lot of debt - over $40 billion actually.  We know GM has had a rough recent history - failed cars, failed business, and lousy improvements.  We know the current economy is not the greatest for this IPO.  But what economy is great? You mean the dot com bubble where everything was awesome and IPO's soared to crazy heights only to fall to zero months later?  

The GM IPO this year could be epic for your portfolio, your future, and your retirement.  You could be one of the ones that bought that "great car company" in 2010 while it was underpriced.  So what does GM have going for it?

1. Positive revenues of $2.2 billion in first half of 2010 in a market that is declining

2. If TSLA's IPO is of any hint, with an opening bid at $19/share and soaring to over $30/share in just a few days before dropping, then GM at the very least can be a quick hit n run trade.

3. Volt.  They say it is unproven technology.  They say it will cost too much.  They say it can't penetrate the market.  But they said the same thing about Microsoft Windows.  The Volt could be the 21st century's version of the Model T.  It could revolutionize the economy.  It can make dependence of oil far less.  It could bring other companies that feed off of electric cars into the limelight.

4. Hope.  In a country where wealth is being destroyed daily, GM can be the ticket to paradise.

I'm only in my 20's.  Will I turn my back on GM's IPO out of fear of losing my entire investment?  Nope.  You don't get many shots like this in a lifetime.  Have I got to buy MSFT again?  How about GOOG?  

This trader will be definitely buying the New GM!

14 Comments – Post Your Own

#1) On August 23, 2010 at 4:36 PM, chk999 (99.97) wrote:

A wise man does not play leapfrog with a unicorn.

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#2) On August 23, 2010 at 4:38 PM, allstarvulture (< 20) wrote:

Not trying to be a jerk, but based on the title, what do you feel is the correct way to play this IPO?  Look for a hit and run?  You've listed some reasons why folks might find the IPO attractive, but haven't really specified how to play it.

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#3) On August 23, 2010 at 4:47 PM, binve (< 20) wrote:


>>A wise man does not play leapfrog with a unicorn.

Speaking of which:  :)

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#4) On August 23, 2010 at 4:51 PM, SultanOfSwing (32.67) wrote:

10 years from now you will either remember in glory or remember in pain.

If you don't trade the IPO you probably won't remember it at all 10 years from now.  I already forgot about the "missed opportunity" of TSLA's IPO.  I think anyone who bought F sub $2 in spring 2009 is in a much better position than anyone who's anticipating big returns in "the new GM" going forward.

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#5) On August 23, 2010 at 5:00 PM, mikecart1 (74.18) wrote:


I don't even know what that means.  Also your rating is godlike lol.

#2) I am buying the first day.  What I should of done with TSLA but didn't.  What are the odds it drops the second it gets out on the market?  It will shoot up.  Depending on how good GM is seen in the market at the time the IPO comes out, it could be like GOOG and steadily rise and rise.  Opening is estimated at $20 billion.  That is huge.  And what if in 5 years the company is worth $100 billion?  


I don't know what that link is.


Correct about F.  But I skipped F because of that lousy Jim Cramer.  Luckily I didn't listen to him about BAC or C when they were $3 and $2, respectively.  I am usually not wrong about these instincts I have.  GM is a buy!

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#6) On August 23, 2010 at 5:11 PM, SultanOfSwing (32.67) wrote:

mikecart1,  Look at the bottom of bubble #3 on that page.  Thanks for that binve (i.e., I really enjoyed the examples).  I closed my eyes and visualized the same thing.  I will have nightmares tonight! x-0

One thing about Cramer.  Whether right or wrong, he often does have an effect on stock prices due to his sheer mass appeal among the sheeple that one must take into account.

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#7) On August 23, 2010 at 5:40 PM, garyc27 (< 20) wrote:

I purchased AONE's IPO--rode it up to $23.52 and bailed with about a $900 profit.

GM on the other hand is owned by the U.S. government who will still retain a significant amount of equity in the company post IPO.  In addition to the $40 Billion owed to taxpayers, GM has a substantial pension deficit, they recently purchased AmeriCredit, for $3.5 Billion, to increase loans to subprime borrowers as a method of increasing sales another 4-5%.  GM also has some 49% ownership of Ally Bank (formerly GMAC) which still funds much of the dealer floor plan.  I'm not sure how they intend to work with a captive financer and one at arms length.

Personally, I'll wait until after the IPO and short the stock.

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#8) On August 23, 2010 at 5:54 PM, Varchild2008 (84.87) wrote:

"It can make dependence of oil far less.  "

Uhm.  No.  Only 40 miles out of a 300+ miles gas tank is electric.  The rest is entirely GAS.

What impact will that really have on gas dependance?  ZILCH!

The decline in Gas Dependancy is happening more significantly by the miserably bad economy causing people to drive less.

There's going to be ZERO impact to Gas dependancy from Electric Plug-ins like the VOLT.   The VOLT is nothing more than an Obama Mandated Vehicle being pumped with Taxpayer Subsidies to push sales that are otherwise artificial.

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#9) On August 23, 2010 at 5:54 PM, rd80 (96.60) wrote:

If there's any euphoria surronding the GM IPO, I expect red thumbing it will rank among the easiest CAPS points ever earned.

1. Even after the IPO, majority owners will still be the US gov't and the UAW.  Their interests may not align with yours.

2. $27 billion in unfunded pension liabilities with the UAW on the short end of the funding stick.  See point #1.

3.  The Volt.  How many middle income people do you think are going to pony up an extra $15k for a car that goes 40 miles between charges?  I predict this will be the biggest product launch flop since new Coke.

4.  If you could have gotten in on Tesla at $19 and were smart enough to dump it near the top, you did well.  Otherwise, not so much.

5. If you must buy the GM IPO, be sure to check into the convertible preferred being issued with the common.  The dividend rate and conversion terms haven't been announced yet, but there's a good chance it'll be a better deal than the common.  

There are thousands and thousands of companies with publicly traded stock out there.  The vast majority of them have a lot less bankruptcy risk than the new GM. 

Good luck whatever you decide.





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#10) On August 23, 2010 at 5:56 PM, Varchild2008 (84.87) wrote:

Let me it in perspective.

Should by work place be in location (A) which it was...before going to location (B)....and could go back to location (A)....

Then I would have to get up in the 40 miles to work and then 40 miles back.

The 40 miles back would be entirely GAS....having depleted the electric portion on my way to work.

And which portion is worse?  Getting to work?   Or coming back home from work where Construction Workers are working on the roads, it's rush hour traffic jam wall to wall...etc. etc.

I'll be draining GAS in a traffic jam and doing so entirely on GAS.

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#11) On August 23, 2010 at 6:51 PM, Valyooo (32.67) wrote:

Hit n Run for me...I will pay any price for it the day it gets online in the second market, and sell it probably about 10 minutes later.

I will never do this in the forseaable future unless Facebook IPOs.

When is it set to release?

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#12) On August 23, 2010 at 7:43 PM, Option1307 (30.45) wrote:

+1 for comment #1 and #3. Hilarious comic Binve!

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#13) On August 23, 2010 at 8:59 PM, HarryCaraysGhost (56.57) wrote:

Personally I would'nt be buying GM. If I want an auto stock it's Ford all the way. That being said with an IPO if you wait a bit ( in this market especially) Chances are you'll get a better price.

Thats how I bought the CBOE.

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#14) On August 24, 2010 at 9:38 AM, mikecart1 (74.18) wrote:

I don't know why everyone makes fun.  Just because a company is complete garbage doesn't mean its stock is unprofitable.  I owned FNM when it was worth nothing and made thousands as I got in under $1 and sold for over $1.60/share.

Even the worst of companies have a price.  GM is far from the worse.

The Volt may revolutionize the car industry.  What other car can you say will do that?  The Tesla can but it goes for over $40k at its cheapest models.

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