General Motors’ third quarter results were far worse than originally expected – with the Detroit automaker losing $2.5 billion and burning through another $6.9 billion – sending the automaker’s stock into a tailspin. Things don’t look to be getting any better on Wall Street this week as GM’s shares have tumbled to 55-year lows.
Deutsche Bank and Barclay Capital both downgraded GM’s stock on Monday, sending the automaker’s shares to just $3.02 – a 31 percent tumble.
Deutsche Bank lowered GM’s stock to sell status, with a price target of $0, according to The Detroit News. Deutsche Bank is expecting a government bailout, which would essentially make GM’s stock valueless.
“Without government assistance, we believe that GM’s collapse would be inevitable, and that it would precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailers, and sectors of the U.S. economy,” Deutsche Bank analyst Rod Lache wrote in a statement. “As part of GM’s restructuring, we are also convinced that a large number of stakeholders who are senior to GM’s equity will have to settle for pennies on the dollar.”
Barclay Capital is slightly more optimistic – putting a $1 target price on GM’s stock – but still feels a government bailout would be extremely detrimental to GM shareholders.
GM will cut about $20 billion from its balance sheet by the end of 2008, but is still seeking at least $25 billion in aid to survive until 2010.
