NEW YORK | General Motors stock began trading on Wall Street again Thursday, signaling the rebirth of an American corporate icon that collapsed into bankruptcy and was rescued with a $50 billion infusion from taxpayers.
The stock rose sharply in its first minutes of buying and selling, going for nearly $36 per share - almost $3 more than the price GM set for the initial public offering. The stock pulled back slightly by early afternoon and closed at $34.19. It had traded for less than a dollar when the old company filed for bankruptcy last year.
On the floor of the New York Stock Exchange, a crowd eight deep jostled around the company’s trading post, adorned with its familiar blue-square logo with an underlined “GM.” CEO Dan Akerson rang the opening bell as raucous cheers went up and the sound of a Chevrolet Camaro’s revving engine echoed through the room.
The government hopes that the stock offering will be the first step toward ultimately breaking even on the bailout. For that to happen, the government needs to sell its remaining GM holdings for an average of roughly $50 a share over the next several years.
Ron Bloom, the Obama administration’s senior adviser for the auto industry, refused to predict whether taxpayers would get all the money back.
“We’re obviously eager to get the rest of it back as much as we can,” he said Thursday.
President Obama himself was even more bullish, telling reporters after the close of trading that “today, one of the toughest tales of the recession took another big step toward becoming a success story.”
“American taxpayers are now positioned to recover more than my administration invested in GM, and that’s a good thing,” he said.
The General Motors IPO could wind up as the largest in history. Earlier this week, GM raised the high end of its initial price range from $29 to $33 and increased the number of shares it was offering from 365 million to 478 million common shares because investor demand was so high. Counting preferred stock issued by the company, the deal’s value could top $23 billion.
At midday, 264 million GM shares had been traded, more than half the number sold in the IPO.
Such volume is not unusual following a high-profile offering. It’s a sign that big institutional investors such as mutual and hedge funds are taking profits and smaller investors who were shut out of the IPO are now buying, said David Whiston, an auto-equity analyst with Morningstar Inc.
“Often the way the world is, the Wall Street institutions get in at the lower price, and the Main Street investor gets in at the higher price,” he said.
The increased selling price, though, means the market is judging the GM rescue as a success, Mr. Bloom said.
“Almost $20 billion in private capital voted that they wanted to be part of General Motors. So we do think this is a good day,” he said.
In the initial offering, the government reduced its ownership stake from 61 percent to about 36 percent. The federal Treasury sold 358 million shares of the resurrected GM - which is smaller, profitable and cleansed of most of its debt. If bankers exercise options to buy and resell more shares, the government will wind up selling more than 400 million shares, reducing the stake to 33 percent of GM.