Why GM stocks are tanking?
 

When GM folded last year and wiped out part of my retirement nest eggs/children college funds, I still hoped that given a fresh start with no baggage I might actually be a fool and reinvest its stock again. The IPO was $34 and the price did climb to about $38, but now it is $26! No, I didn't put any money in it but I just scratch my head while the stock is so bad? It does have a consecutive monthly profit and it sales in July was over 7% while the nationwide auto sale was in 1%.

Because the stock market itself has tanked and the economic future is likely headed into another recession?

Look at Apple.

Are you Rexjakes dad by any chance?

Apple could easily go bankrupt in less than 10 years...hell they've almost done it before for exactly the same reasons that it could happen this time. The only advantage they have this time around is that when it happened the first time their execution and marketing missteps were dealing with a MUCH smaller market for computers so they had less margin for error. Plus the general consensus is there is a tech bubble going on again. When recession hits it is likely to pop.

Apple sells trinkets that nearly anyone can afford and you certainly don't need a loan to buy their goods. Selling a car for tens of thousands of dollars is another story.

1) Millions are out of the loan market for any goods.
2) The future doesn't look bright due to many companies (once again) announcing they are going to have mass layoffs later this year.
3) The price of the stock today is a view of sales down the road, not last month.

This might also be a problem. Management seems to think the Volt is selling well... compared to reality.

The July sales numbers are out and the Chevy Volt continues to electrify (get it?) the country. GM sold … 125 Volts last month!


http://www.weeklystandard.com/sites/...ama%20Volt.jpg


Way back in March I made fun of the Volt for selling 281 units in February. Turns out, February was a good month. But wait, there’s more! GM says they’re going to increase production to 5,000 Volts per month in order to keep up with demand. You see, they claim that the reason the Volt isn’t selling is that they can’t keep enough cars on the lot. A GM spokeswoman recently claimed that they are “virtually sold out.” Which is virtually true. Mark Modica called around his local Chevy dealers and found plenty of Volts waiting for an environmentally conscious driver to bring them home.


All told, GM has sold close to 2,700 Volts. (Funny aside: There’s a Volt in my neighborhood and a Volt that parks in my garage at work. So I see almost 0.1 percent of all the Volts in America on a daily basis.) But hey, the EV future is just around the corner.

because they continue to make junk cars and charge just as much as cars that are far more reliable.

next question

We aren't in one already?

I have two coworkers that drive Malibus and love them. I've ridden in one of them once and it's a nice car. I don't know about reliability at all, but they've had no problems.

I think it will get much much worse before it gets better... This country has zero leadership and no true direction.

Perception wise and from mainstreet wise very likely...but from a technical point of view the economy is still growing(very slowly) at least for now.

Actually our company is growing like wild fire due to the economy... We cant meet the demand for our services and have started a waiting list.

I have actually had to stop sales and take the foot off the gas. We damn near burried the company.

We are having to control this insane growth...

What business are you in? Is it something that offers a cheap alternative to the way things were done before? Just curious.

The company I work for is doing well, too, but it's because of Asia and the Middle East, not what's happening in the US for sure.

This

Offshore staffing for IT services... My business partner and I own services centers in 2 different countries. And in negotiating in a 3rd country to help us take the pressure off of hiring.

We sell those people back to our US clients... We have grown from 6 total people to over 53 in 18 months...

Thankfully those countries are up and coming... its allowed us to grow our US and overseas offices... We are providing a good quailty of living for many people around the world, including here in the US...

I don't understand the confusion. Look at the used car market, it is booming and small efficient cars are appreciating. My son is an auto broker and it is near impossible to get a used Toyota, Mazda, Honda and even Ford for less than Blue Book value. Meanwhile, used GM cars are dropping value, nobody wants them. Same for new cars, nobody wants the crap small and midsize cars from GM. Even the much desired Volt only sold 124 cars last month nation wide.

GM stocks are tanking because their product sucks. No matter how much the President saves GM and props up the UAW the product still sucks.

You can get a decked out corolla for 4k less than a base model Malibu and the reliability record on Consumer reports is night and day.

Shit, you can get a Altima Hybrid for about the same price as a Malibu.

If Chevy wants to make a sub average car (as they are rated in nearly every place that researches them) they should sell them for cheap as hell.

Let me ask you this...if you went to the store and Ribeye steak was the same price as ground beef, wouldnt you get the steak?

I sure as hell would.

In the mid 80's they realized that if they stop making cars with high quality and good longevity, they will sell more cars. Now, they and the consumers are paying the price for their greed. I've wondered why a company doesn't come out and be like, "hey, let's make cars like we did in the 70's??!??" It seems like too good of an idea to actually happen, there is probably a hidden law or an unwritten rule against that.

No one will know the new cars rolling off from the GM plant would be junk cars until 3-4 years later. You guys base on the assumption of the past.

Last Chevy I bought was a 2005 Malibu.

We've had 2-3 major repairs (2 of which were related to a recall, but we were over the mileage cut-off) and I found rather quickly that GM wouldn't stand behind shit.

I blame liberals and the damn unions.

Hey, give them a break.... they know it all about the car market.

The thing is that their short term greed took priority over long term company health. By the time they realized their problem, costs had already spiraled out of control and their reputation had been ruined. Even if they DO make good cars, everyone will just bash them anyway (as seen in this very thread). It will take a lot of work to turn this giant sinking ship around and keep it afloat.

This might be one of the most uninformed posts of all time. "Errr, Apple could easily go bankrupt in ten years"


They have 76Billion of cash on hand. Even if you believed that their entire product line was vulnerable to competition and obsolescence they could play defense like Microsoft has and still be around in ten years by using the money to acquire competitors and bringing new products to market.

+1

Just bought my wife a used 2010 Malibu last night...

She loves it.

i recently ditched my '05 Malibu; had 88k miles on it. While overall it was a decent car, I couldn't believe how the quality degraded over the 6 years I owned it. I bought it with only 20k miles on it.
Replaced the intermediate steering shaft at 40k miles, and again at 65k; and it was ready for another at 80k but I decided I wouldn't replace it. Service bulletin issued, but they wouldn't replace it; so $350 a pop to replace it.

Rear window wiper would just come on for no reason and shut itslef off when it chose too. Constant alignment issues. Ignition would sometimes stay on after I stopped turning the key, causing the engine to continually try to 'start' (if that makes any sense); Radio would have random buzzing for no reason for several days, then go a week or so with clear sound, then it would start again. Power sterring/steering assist would stop working at random times, mostly in slow turns.

both seat fold-down lever thingys broke off

Rear plastic on the back of the front seats came loose on the passenger seat; so I had this dangling plastic piece the size of the seat always dangling around.


Overall, it was at least 'reliable' in that nothing blew up on it, never left me stranded etc; just very disappointed as a whole with the vehicle. Bought used VW Rabbit last month; 3 years old; 40k miles; four new goodyears, and new brake pads; 5 speed; for $13k. Fit/finish etc is night and day better. My Malibu at the same age was beginning to fall apart/have constant issues.

it didnt throw up a red flag with how many USED 2010 ones there were for sale?

With the model year end sales already going on, or getting ready to start, you probably could have gotten a brand new Nissan Altima Hybrid (that gets 33 MPG with 200 hp) for the same coin.

Guys, go look at consumer reports to see for yourself how much a difference there is in reliability between Nissans or Toyotas and Chevy cars.

Its sad.

Especially being that the Chevys are more expensive.

On a Toyota brochure, it states that 80% of all cars/trucks they have made in the last 15 years are still on the road.

I bet Chevy is more like 50%...if that.

I bought a chevy a couple years ago and it exploded killing my wife and kids. Chevy wouldn't even replace the vehicle.

did you at least purchase the Rust Proofing and Fabric Scotch guard options?

:clap:

That's actually a good overall approach for life.

Nope were good. have purchased my last 3 cars from the same dealership. have a great relationship with a couple of people in there... It was about the easiest deal we have done to date.

Wife loves it. good warranty. She is happy, I am happy...

Now now this post is far less informed than mine. ;) Obviously it's designed to be somewhat of a exaggeration because of the cash position but you might be surprised how easy it is for a company to burn through a believed strong cash position. What many people may have forgotten is that apple has been in the same position they are today before. They had dominance of the PC industry for some time, but due to a set of missteps they lost that and allowed MS to take over their position.

The concern is that they are making many of the same mistakes again that they made before. Given that, why do you expect a different outcome than before? Making mistakes is natural, failing to learn from them is where it is inexcusable. The big difference is that the computer market as a whole is quite a bit larger than before so their limited dominance has allowed them to build a better cash cushion than during the 80s/90s. Cash is only useful if you can use it well, if you can't it may only prolong the inevitable. It's a nature of life that not many people are willing to tell the emperor that he's wearing no clothes.

It's not popular to say that apple is running the significant risk of falling yet again, but that does not make it any less true.

Had the same issues with steering, as well as the interior.

We also had to replace the compressor on it less than 6 months after the steering went.

I drive a Toyota. Ya know, the one that made headlines for years about unexpected acceleration that proved to be a red herring?

Where were the headlines about GM cars that have so many problems?

I saw a snippet about Ford truck gas tanks falling off. The Toyota story was everywhere for days. I don't think I can find the Ford story unless I dig.

If GM is too big to fail, wtf do you do if Apple or Google fail?

Oh ok. I guess my bad? or, not.

You read like TipTap by the way.

Move on. Those companies are a zit on a gnat's ass.

Ill just say this about GM.....ive owned Honda, Toyota and GM cars in my life. When you sit in a Honda and Toyota you can see and feel the quality through and through. GM cars look and feel cheap.

That is a very broad generalization.

So you can feel the quality in a Scion xB but a Caddy CTS feels cheap?

Not if you buy them used.


The cars built in the 70s were pretty horrible as well.


That generally means that it is a very popular rental car. You know, the kind of stuff legendary driving machines are made of.

Apples to apples would be Lexus vs. Caddy.

absolutely.

Go test drive an Altima and then drive an Impala.

Not even close
4 years later the bumper falls off the caddy and the Lexus sells used for within 10% of a new one.

America needs to step the **** up in the car market

Why anyone would put more than 10%
of their portfolio in ONE stock is beyond me.

Diversify, Mutual funds.

Don't worry, there are no union employees for the government to worry about buying votes from.

GM has done some good things of late. They have some very marketable autos. However, they are at the top end of the spectrum and are not the most fuel efficient.

The real issues come down to expenses. As long as you have overpaid union labor with government backing in negotiations, it is going to be very hard to turn a good profit.

There was a time when unions were necessary. That time is long gone. Unions are the mafia of the middle class. It increases labor costs and puts that money into Union Bosses pockets for 'protection'.

My father was a member of a union. I have been part of a Union. I just don't see much use for them now, other than to protect the non productive workers and to help keep democrats in office.

Nah, 80% of Chevys are still on the road too...somehow the other 20% made it home.

What are you basing this on?

But they have to figure out how to overcome the negative bias they've built up with the consumer over the last 10-15 years. THAT will take some tough marketing work and some innovative design (along with a consistently reliable product, of course).

resale value and the reason of why there is such a huge discrepancy between American made vehicles and Nissans/Toyotas in regards to such.

People dont want to sell their Nissans/Toyotas because they are reliable where Chevys are unreliable.

Chevy changes the name of their models every few years because by then the word is out that they are garbage.

No, I mean the part about Cadillac bumpers falling off. Cadillacs are quality.

I know about the perceived reliability discrepancy.

Winner. I am driving an Impala rental car this week...what a total POS. I would never buy one!

you can buy a 6 year old Cadillac for pennies on the dollar...not so much with a Lexus.

You think thats just a coincidence?

Are you in the Philippines?

Yes our account executives are in the Philippines, our IT staff is in Islamabad and Lahore Pakistan. And were working on opening another facility in Bangladesh...

Do your reps take phone calls for American companies? I'm asking because I monitor calls where we have Phillipino reps take calls from American customers. It can be miserable. I feel bad for our customers.

Yep we sure do...... We actually allow our clients direct access to developers and IT admins...

We give them local skype numbers. We personally pre screen every canidate for english communication skills.

Its one of the main reasons we are exploding, our American oversite and direct access model is killing the offshore industry...

Rexjake just chauffeured Guilani in to the Hudson

so, why isnt Houston signed yet and can I get a small forgivable loan?