General Motors: Back To The Future

Filed under: Questions from You

Helvio Vairinhos sent us a question:

I heard in the podcast and read in Bloomberg that GM stocks fell to a minimum of 59 years... what does this really mean? Does it mean that the company worths the same it was worth 59 years ago, if someone was to buy it today? That all the value they accumulated in the last 59 years went down the drain? How can a company recover from such a drop in a short period time (I mean, without waiting another 59 years)?

It's hard to overstate how badly this American icon has stumbled of late. The automaker's shares have lost nearly half their value in the past week, giving the company a market value of $1.6 billion, below the $2.0 billion that many investors consider to be the ceiling for small-capitalization stocks. Ouch.

The company is worth less than it was nearly since its was founded a century ago. In 1929, its market capitalization was $4 billion. At the start of this decade, its market cap was $66 billion. Whether GM will have any market value by the end of the year remains an open question: the company's executives have reportedly told lawmakers that GM needs federal cash in order to avoid filing bankruptcy as soon as later this year.

Daniel Costello

12:34 PM ET | 11-11-2008 | permalink

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