General Motors shares rise in stock market debut

General Motors shares rise in stock market debut

2010-11-19 00:17:41 GMT+7 (ICT)

NEW YORK (BNO NEWS) -- Shares of General Motors on Thursday opened for trading and quickly rose on its stock market debut in what became the largest public share offering in financial history.

General Motors started actively trading on the New York Stock Exchange under the ticker symbol "GM." On Wednesday the automaker company priced its shares at $33 each in the largest initial public offering ever. In the morning, the shares opened at $35 and later rose to $35.63, a 6 percent increase.

The offering raised $23.1 billion and was more ambitious than expected. GM recently declared in bankruptcy and the Obama Administration decided to keep the automaker from collapsing. The U.S. government invested $50 billion and GM needs to build on its revival to break even.

The U.S. Treasury Department needs to sell its remaining 500 million shares at an average price of $53 over the next years to recoup its investment. GM also intends to reduce the government’s ownership stake to as low as 31 percent from the current 61 percent.

The amount of control that the U.S. government has turned away some potential buyers. However, the government’s aid to GM and Chrysler saved more than 1.1 million jobs in 2009 and 314,000 jobs this year.

Last week, the Detroit-based automaker reported a $2 billion net income in the third quarter with a revenue of $34 million, a 20 percent increase. The motor company has emerged impressively from the government-financed restructuring under bankruptcy protection in July 2009.

GM expects to report positive earnings before interest and tax for the fourth quarter, albeit at a significantly lower run rate than each of the first three quarters, and profitable year-end results for the current calendar year.

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