Tag Archives: GM

Why GM earnings are not what they appear

Perception: GM’s recent profits means that the federal bailout worked.

Reality: The bulk of the profits came from the sale of two divisions. GM’s stock is still trading below the IPO price paid by the government.

Economist brainiac Megan McArdle makes her usual impressive points. The highlights:

  • GM sold off big stakes in companies to generate the bulk of their profit.
  • GM still excessively dependent on big incentives and fleet sales to move cars.
  • GM’s most profitable sales are heavily dependent on gas guzzling SUVs and trucks, not the best position to be in when gas prices are exploding.
  • Even though GM’s largest competitors just had their supply chain badly damaged by an earthquake/nuclear meltdown, GM’s stock is trading below the IPO price.

The entire McArdle column is copied at end of post. Continue reading