General Motors shares rise in stock market debut
General Motors Co. stock jumped $3 in early trading to $36, a sign that investors are eager for shares in the formerly bankrupt automaker.
GM executives rang the bell on the New York Stock Exchange and than revved the engine of a high-performance Chevrolet Camaro to open trading Thursday morning in what became the largest public share offering in financial history.
Owners of the Detroit automaker, including the federal government, raised $15.8 billion in the offering and are expected to sell additional shares to bring the total to as much as $23.1 billion Thursday as the stock goes public in its highly anticipated debut.
The offering reduces the government's ownership stake to as low as 33% from 61%. And it will help the company shed the derisive title of “Government Motors,” which has turned away some potential buyers, Mark Reuss, GM's North American president, told The Times on Thursday shortly after the shares began trading.
“It is an important step and a milestone here. But what really matters is that we deliver products that customers want. That’s where we have to focus our energy,” Reuss said.
“There are an awful lot of employees who never gave up. We have to keep our head down and keep making great products,” he said.
GM's turnaround, enabled by the taxpayer bailout, has been impressive, considering that it emerged from a government-sponsored bankruptcy proceeding only last year.
The automaker reported its third consecutive profitable quarter last week and is on track to have its first full-year profit since 2004. Bolstered by better sales and cost-cutting measures, GM earned $2 billion in the third quarter. Revenue rose to $34.1 billion, up 27% from the same quarter last year, which included nine days when the company was in bankruptcy. From 2005 through 2009, the automaker had about $88 billion in losses.
The stock sale included a $500-million stake taken by the Chinese SAIC Motor Corp.
The previous record for an initial public offering was $22.1 billion set by a Chinese bank this year.
-- Jerry Hirsch
Photo: General Motor's new Chevrolet Volt. Credit: General Motors