GM Stock Craze Likely To Be Excessive
Yet, anyone who expects to start the track with fanfare in GM stock's first day of trading may be disappointed, writes Lynn Cowan, in The Wall Street Journal, saying underwriters walk fine line with GM IPO. The risk is that despite the strong demand this is a company the seller of which "wants to recoup every nickel possible from its initial investment."
Two days ago Cowan wrote that "negotiating a price that will satisfy all sides is going to be a Herculean task for investment bankers, who have set a preliminary range of $26 to $29 a share. Under ideal circumstances, people close to the deal said, GM's stock will rise about 10% on its first day, give or take two percentage points." Even then there was a talk that the price range may be raised to reach 33 dollars.
While the amount of common stock share is 365 million, GM this morning said it is increasing the price range for its planned initial public stock sale to $32 to $33 a share. The company will also up its $3 billion preferred stock to 4 billion.