The IPO Mess Obscures the Real Question About GM
Forget the politics, the price, or the fact that this GM IPO shows how screwed up Washington is right now.
Forget all of that and ask yourself one question: If you had $10,000 to invest in the new General Motors, would you do that?
I've asked some friends and colleagues outside of the auto industry that very question. And what I hear from most of them is, "Yes, at least for the near term." I'm not surprised, especially after seeing how much money GM is making right now and will make over the next couple of years. This is a company leveraged to be very profitable for the foreseeable future. That's the reason there's so much demand on Wall Street by those who want to get in on the GM IPO.
So why are so many people ambivalent about the GM IPO?
Because it's a mess. It's been rushed, poorly handled by the folks in Washington, and in general leaves a lot of people asking themselves, "What is the new GM all about?"
That's the real question you should be asking yourself after the stock finds its right price post-IPO. And when you look at how GM is set up in China, developing markets, and yes, here in the U.S. it is clear this company will be very profitable.
Does it mean GM will pick up market share and become THE red hot auto company in the industry? No. But it doesn't need to be. It needs to make money. And with its costs stripped down to a competitive level, GM should make billions, even if sales and market share stay at the current level.
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