GM IPO could reignite stock market

The automaker's public offering could be the feel-good, make-money story of the year.

By Jim Cramer Nov 2, 2010 8:31AM

jim cramerBy Jim Cramer, TheStreet

 

We're lost in the miasma of the election, the Fed and the coming labor report, and no one can blame us. But right around the corner is an IPO that could ignite as much interest in the market as we have seen in years: that of General Motors.

 

The GM public offering is kind of like the U.S. Olympic team in 1980, the Miracle on Ice: a feel-good story, except that you get to make money from it. That's right, I believe the deal is going to be a smashing success. The key questions are who is going to get it and how can you get in.

 

It is not just pricing that matters, although I believe the government is going to throw it to the good guys, meaning the buyers. There's also actually a strong investment case out of China.

 

Auto sales had hit a weak spot earlier this spring, but they're on the mend now. Even more important, data from China out last night shows a 6% decline in Toyota (TM) sales for October, while other auto companies have gained market share.

So my thinking is that GM will have terrific growth numbers in China and more market share than we thought it would have when the deal was first discussed. Plus, this GM has a good balance sheet and a management team that I'm told is much tougher than it had been, even under Ed Whitacre -- and I thought he was terrific.

 

We have all approached this week with the appropriate view that it is fulcrum. But, remember, the market will be open next week at this time, and the week after, and this GM deal is going to excite a lot of people and maybe even entice them back to the casino.

 

At the time of publication, Cramer had no positions in stocks mentioned.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Click here to follow Cramer's trades for his Charitable Trust.

 

 

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18Comments
Nov 2, 2010 11:51AM
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Im with havasu46. Forgive and forget? Not a chance. I understand the move was good for the economy still the government was allowed to circumvent their own law when they took out the bondholders without liquidating the company. Total BS.
Nov 2, 2010 11:48AM
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It will be interesting to see how many suckers buy the new GM.....after they stuck their bond holders I would not touch it....too much union control and it is foolish to think the taxpayers will really recoup the bailout they were handed. Let China have them.
Nov 2, 2010 11:38AM
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LOL I don't like companies that file bankruptcy to screw their creditors and stockholders only to come back and act like nothing happened.  The government partially caused the banks fiasco but GM is a whole different story.  I'll invest in Ford but I wouldn't buy GM's products or stock if they were giving them away.  Hopefully China buys all the GM stock and moves them there.  Let the unions screw with their government.

 

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The only way to make money on the GM IPO is to bet against it.  The Unions and the Government will suck the blood out of any investor who falls into their web.
Nov 2, 2010 3:02PM
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Nope, sorry Cramer...I'll stay wide and clear of GM stocks. Need to check theri bottom line on how many cars-trucks are actually being sold these days...don't know who's buying them. I feel like GM wants to pass the (federal bailout loan) buck to the consumer. I love GM, but who's buying in a deep ditch recession?
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Tommy Subway:"Seriously though, buy American even though most of the parts are made and assembled in other countries. "

 

Isn't that the same as saying: Be loyal to American corporations that have been bribed for generations with tax subsides to be loyal to Americans, but instead sent the jobs overseas in the name of further profit and a f'ck you to the American people???????

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I lost out as a stockholder on GM; it happens. MY real focus is that the government,( as directed to by Obama and some intelligent Congressman, both Rep and Dems), stepped in and saved what could be saved, as a good government is supposed to do.

I hope the IPO comes in at a reasonable price so that all Americans who can afford to invest in our country and its workers will do so. Regards, B

Nov 2, 2010 11:24AM
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Let's hope GM does well. The American taxpayer needs that money back, so our gov't can waste it on something else.
Nov 2, 2010 10:39AM
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Buy USA FORD. I did and I made sure it was USA made!!!!
Nov 2, 2010 10:29AM
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oleshep I hate to sound mean but when GMs stock was tanking any smart investor would have sold the bonds.  Then when the top execs were dumping GM shares by the dumptruck load you should have sold your bonds.  Hanging on to them when GM filed is just bad investing.
Nov 2, 2010 4:28PM
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Ha Ha....That's it!  The market can finally collapse now that Mr. C has proclaimed the IPO could re-ignite the market.  All aboard............

 

jomama502,  see latest test results for dependable vehicles.  If you can't read, have someone else do it for you, you turd.

Nov 2, 2010 3:51PM
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Another "no" vote here.  Burned once with GM and not about to repeat the mistake in the hope that it will turn out better this time.  Isn't that one definition is insanity.  Yes, I do realize that as a short term play, GM stock might even be profitable.

 

Here is an idea:  If GM is such a great buy, let the UAW double and triple down its bet.  They already own a big piece of it, along with the government.  This is a golden opportunity for them to own the majority of the company.  

Nov 2, 2010 2:40PM
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Smile

Hey Jim,  Apple should buy GM with their $51b in cash and bring out the iCar.

 

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GM IPO could reignite stock market

 

But, is that ignition going to lead to another cigar blown up in the faces of the prefered stockholders.......like last time??????????

 

If anyone is dreaming that there is even a smidgon of a chance for further bailouts after the last one that basically lent our money @ "0%"  in a quantity of at least 2-3x the worth or capitalization of the company, think again!

Nov 2, 2010 12:29PM
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Someone better buy GM cars...I won't, I'm sticking to Ford the company that didn't need the government's help.  But GM needs to do well for us to get our tax money back...Chrysler is a lost cause and we will never see that money again.  Plus GM doing well will probably help boost my Ford stock which I have already made a 700% profit on.  Seriously though, buy American even though most of the parts are made and assembled in other countries. 
Nov 2, 2010 11:35AM
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If GM is doing so good? I guess that means people are buying cars. Wonder why not house's??
Nov 2, 2010 9:35AM
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I was a bond holder at the time of the bankruptcy and there is supposed to be a settlement in shares of common stock to repay the bond holders of record at the time.  I have yet to hear anything that gives me a clue as to what that deal will look like.  I am certainly hoping for the best because  my GM bonds represented a significant part of my portfolio that I was building for my retirement.  GM and BAC were my two biggest losers at the time so I am really watching to see how this shakes out.   
Nov 2, 2010 12:01PM
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buy all the gm u can because union is number one and america is number one. for all u overseas buying a holes i hope your gas pedal sticks and you hit a tree full speed.have a nice day
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