Worthless GM stock will keep trading, but not on NYSE

Traders are still having fun with General Motors Corp. shares today: The stock plunged as low as 27 cents this morning after the company's bankruptcy filing, then quickly resurged to as high as $1.01.

A savvy trader who bought at the morning low and sold at $1.01 made 274%. Not bad for less than a day’s work.

The shares were trading around 84 cents at about 10:50 a.m. PDT -- still up 9 cents from Friday’s close.

GM has said unequivocally that the stock will be worthless after the government, the United Auto Workers and the company’s bondholders take their pieces of the restructured company. But we’ve seen this movie before: Traders often will play with a worthless stock for as long as they’re able.

They won’t be able to on the New York Stock Exchange after today, though. The NYSE announced it will delist the stock after today’s session.

As of Tuesday, trading in GM’s shares will move to the electronic "pink sheets" market, at pinksheets.com. The new ticker symbol: GMGMQ.

Why should a worthless stock trade anywhere? For one thing, there still are investors who’ll need to sell -- including funds that replicate the Standard & Poor’s 500 index.

Although Dow Jones & Co. said today it will drop GM from the Dow industrial average, the stock remains a member of the S&P 500. Assuming S&P jettisons GM soon, S&P 500 index funds will have to do the same.

(And GM still gets five more days to hang around in the Dow: It will be replaced by Cisco Systems on June 8.)

There also are investors who still need to buy GM: short sellers who previously sold borrowed shares, betting on a collapse. They now must cover those trades.

-- Tom Petruno

Photo: The GM logo on a chimney at the shuttered assembly plant in Janesville, Wis. Credit: Scott Olson / Getty Images

Comments

[Curious George]

Everyone takes equity-for-debt.
The proceeds from the sale of old GM's asset goes to who/when/why?

[Niels Hartvig-Nielsen]

the Union parasite has finally consumed the host and is now taking over its body. What will Michael Moore have to say now ? Will he cheer from the sidelines or admit that he was wrong and that GM should have acted far more aggressively far sooner. What will the Union members say now ? That militant demands that exceeded common sense have resulted in the loss of their jobs and a significant industry in the US ? But the fat cats in their private jets also have to be accountable. This was a cluster F#(K of unaccountability that everyone has to pay for now.

[Jack]

America needs to stop looking inwards and congratulating itself on its glorious past. That is a way to ensure that is becomes increasingly disconnected from the reality of the external world. That is the true cause of the GM bankruptcy - it persisted in old inward looking attitudes and assumptions while the external world learned from, caught up with, then passed the USA in the art of making automobiles. Great Britain has also fallen into this trap and has become in many ways a backwater - America needs to realise that while its past is magnificent, and its people are vital and talented, resting on old assumptions in a changing world is a sure way to disaster.

[J]

I for one am glad to see them go... I wished for this last year when I saw the EV-1 get crushed at the hands of big oil... Now it was big oil that took out GM and didn't even bat an eye. I say good bye so long and farewell Government motors is gone and so is our money.

[sam j]

Yes, that is right, blame the unions for everything. If it were not for the UAW, GM would not be around as long as it was. No, GM was done in by upper level management making over 800X the average union worker, by shifty derivative traders, and its own poor management decisions. I am sick of conservatives hanging on to their delusions of a "free market" (which never existed) and claiming that if only we click our heels and wish for the free market fairy to appear, all of this will go away. Heavily unionized VW is doing quite fine, thank you.

Of course, we could go to the alternative, and try to race every third world nation to the bottom of the wage pool in an attempt to drive American workers into poverty. Yes, let's blame the unions. Try turning the channel away from Faux news.

[Roger Ramjet]

Just like many corporations I have worked for, short term thinking did them in along with UAW sucking everything they could out of GM. Come on, lets be real! Job banks where guys and gals sit around and collect 70% to 90% of their salaries! Wake up and smell the coffee. Did you really think this was going to go on and on. What is really sick about this is the very management clowns that are responsible for this have millions in their bank accounts. They could really care less about the workers. But of course, in public, their so concerned and sad. Perhaps they can get their official spokesperson to do it for them so they don't miss a golf game!
I remember when GM was spending millions to lobby congress to prevent the MPG from being higher on their cars Get out the pitchforks and lets have fun with the past GM executive morons......

[Roger Ramjet]

This is America! No one is accountable as they laugh their way to the bank depositing their millions.

[philip butchers]

I once read, Unions made the middle class. As the Unions go so will the middle class. What will be left are wealthy and poor. A lot more poor than wealthy. The next step is anarchy. I am a Manager in a Union plant. I have always said what see in regard to the so called Union driven problems are not the fault of a Union. The problems are the fault of weak management that negotiated contracts that management knew could not be sustained. Weak, cowardly, greedy management is, has and always will be the problem. Thanks God I work for a Unionionzed company that understands this and manges accordingly.

[pugtv]

Unions in itself are not bad for society. It is the the people who run the unions recklessly that can be bad for society.

In the case of GM, hindsight is 20/20. it is clear both management and the unions are heavily at fault for the mess today.

Last point. There are other countries in this world that have a strong middle class but do not have strong union representation. There are also other countries in this world that historically have had strong union representation and are dirt poor. My point is, a union is not necessary to have a strong middle class.

[Anon-Ymous]

@philip butchers. Sorry to get off topic but since it seems to me that your a fan of unions I wanted to ask this question. Why aren't unions anti-free market?