Since I have dealt with Ford in the past, it seem appropriate to deal with GM too.
I am amazed that so many folks are just itching to invest their hard earned dollars into Ford and/or GM. Many of you sincerely believe that there is no way that the government will allow them to fail. Well, no one can be sure, but the facts about GM are disturbing.
I’m going to outline for you what can be found in public records (public companies must provide financial statements and results to the investing public) and let you decide for yourself.
- General Motors does not make an operating profit, on average, on any car that it sells.
- GM has over $40 Billion Dollars in debt on its books
- GM, through internal estimates, believes the Enterprise Value of its company to be just north of $30 Billion Dollars…what is left when you have assets of $30 Billion but you owe other people $40 Billion?
- Over 15% of GM shares are currently being sold short (that means people have borrowed GM stock to sell it because they believe it is going to go down even more and they can then buy back the borrowed shares later at a much lower price than they sold them for…thus making a profit.
- The CEO of GM said on television and before Congress that his company is burning through about $5 Billion dollars a month.
The list can go on and on. The bottom line is that some of us will be right on GM, some of us will be wrong. I just suggest that you proceed with caution!