Can GM possibly go lower?
Well it turns out in 2001, they actually (“funny story really” says CEO Wagoner) made 1/2 of what they said they made now that the SEC happened to ask…
OK so that’s pretty bad but if people thought they were worth $48 in ’02, even with 1/2 earnings they must be worth $24 3 years later – and didn’t that rich guy just buy a whole lot of it for $31?
That rich guy is a loon! There I said it… Perhaps he bought the company for the value of it as a sell off but there will be a lot of resistance to breaking up GM and I suspect the parts aren’t actually worth what people thought they were.
I think, if I understand this correctly, they are going to lose $1.98 per share THIS QUARTER! That will make a grand total of $10.67 LOST – PER SHARE in one year!!! (I am running out of ways to emphasise this…)
That wipes out all the money they say they made in 2003 and 2004 and it also means that they have accomplished losing almost 1/2 the total share price in one year. Now sales are much higher than they were in 2002, when they made (pending restatements) $3.4B and 2003 when they “made” $5.1B so that means costs are going up faster than sales. Watch out below when sales go down!
This stock will probably open at a 10 year low today of about $24, the lowest number this stock has touched since the early 90’s is $23.49. There will be many people looking for some kind of bounce – calling this a double bottom like that’s some kind of cosmic sign but I say the December $27.50 put @ $3.60 is a good deal with only a .75 premium to overcome.
Unfortunately most people over 50 have it drummed into their head that “As goes GM so goes the nation” and they may be right. This stock can actually drop $8 before being technically oversold so my official call is buy the put below $4 and sell at $6 or sell 1/2 at $6 and put a $5.5 stop in, rinse and repeat every dollar.
