What is Digg?Sponsored by Best Buy
He sings, he strums, and he works at Best Buy. view!
youtube.com - Musician and Best Buy employee, Keith Parsons, rocks his Best Buy holiday campaign audition.
86 Comments
- Nairebis, on 05/07/2009, -3/+46Sheesh, are people this ignorant? They are NOT saying you get a penny for every dollar of value you currently own. The value stays exactly the same. If you currently own 100 shares that are worth 10 cents/share, then after a 100/1 reverse split, you would own 1 share that's worth $10. Same value. It's purely a bookkeeping move.
- NYankee2003, on 05/07/2009, -5/+43The craziest thing about this, and what most people don't realize, is that because GM is a Dow 30 component, (which is NOT market cap weighted and instead share price weighted), this would make GM the most influential Dow stock. When GM stock crashes again it will mathematically take the Dow Jones average with it, unnecessarily screwing up a lot of inexperienced investors, along with the quant funds that just trade off of the numbers. The DJIA is worthless now (nice job buying that one ruppert murdoch). The S&P 500 is the best indicator we have left. More likely, GM will lose its spot in the Dow 30 though, as it should.
- idc5, on 05/07/2009, -1/+28GM does not make the Infiniti in the picture.
- robbob, on 05/07/2009, -1/+26we don't do that here
- one1plus1one, on 05/07/2009, -0/+22However psychological factors impact and move share prices in a very real way.
Companies do this reverse split so that their stock can be given room to fall further to new ultra-lows, without too obviously seeming like a penny-stock. - dofe, on 05/07/2009, -1/+17It's called a reverse stock split and has been done by numerous companies before.
- inactive, on 05/07/2009, -1/+12Usually they buy those people out and you get the cash value of your shares.
- Mike17102, on 05/07/2009, -1/+12So they send you a gift card for a free doughnut and tell you to keep the change?
- one1plus1one, on 05/07/2009, -1/+11PS:
The RBS bank did the same thing recently on the NY stock exchange a few months ago, when their stock price dropped to a shocking and unprecedented measly $1 per share, in value, due to their bad investments.
When they saw their share price approaching 1 in value, they did a reverse split at 15 to 1, if I remember correctly.
So, if you had 15 shares valued at $1 each, in the end you then had a single share valued at $15.
This then gave the stock psychological room to plummet further without overtly seeming like it was a penny stock, and it went from $15 per share back down to $1 once again!
Recently it went back up to $12 per share. But that is still in penny-stock territory if you mentally undo the reverse split from a few months ago. (If you mentally undo the reverse split it's like having 15 shares at 80 cents per share.)
So that's what GM is doing: giving their share price more psychological room to collapse further without being de-listed from the exchange for becoming a penny stock. - d3dm, on 05/07/2009, -2/+10You get Hope & Pocket Change.
- paulsmerdon, on 05/07/2009, -2/+10Yes, but you end up with fewer shares, and it frequently falls from the split adjusted price very quickly.
- inactive, on 05/07/2009, -1/+9Not even close. Next.
- kingmanic, on 05/07/2009, -1/+8You get less than one stock.
- hotpuck6, on 05/07/2009, -0/+6Or they could buy the stock back...
Oh that's right, with what money? - kierucom, on 05/07/2009, -1/+7Yes- it's much more common than you might think.
- YoWhatDaFuxUp, on 05/07/2009, -2/+8Bankruptcy is imminent either way
- kierucom, on 05/07/2009, -2/+7As others have said; most likely you would be bought out.
- thelastczarnian, on 05/07/2009, -0/+5ya,,, I own a stock that just did this. They went from $8 to about $0.26 in about a year, they consolidated the stock 10 to 1, temporarily bringing it up to about $3, but it fell back to the .20-.30 range within a week or so...a move that basically cut the price by a multiple of 10. If they do this I'm gonna go short and watch it close.
- stev31h, on 05/07/2009, -4/+9if you'd like to pay the unemployment there employees would be able to collect, go ahead, let them fail.
- inactive, on 05/08/2009, -0/+5Correct me if I'm wrong, but if you have 1 share at 100 bucks or 100 shares at 1 dollar, you'll gain or loose at the same rate.
- Rikkochet, on 05/07/2009, -3/+8Yeah, it'd be a terrible couple of weeks while they tore down the GM signs and put up new Audi or Toyota signs and put everyone back to work.
- robertisaar, on 05/08/2009, -0/+5jump off of the tallest building you can find?
- paulsmerdon, on 05/08/2009, -0/+5Going by the math, you're 100% right. Unfortunately, the market is based on psychology more than it is pure numbers.
Since the market tends to see reverse splits as a bad sign, the stock will most likely drop more rapidly at $160 than it would at $1.60. Also, there's more "room" for the share price to fall when it's priced 100 times higher. - Hockey13, on 05/08/2009, -0/+4You receive a fractional share with the option of receiving cash in lieu.
- michael0310, on 05/08/2009, -0/+4This is certainly no defense for the rest of their lineup, but they do produce the Corvette. If that's not a decent car then show me one in the same price range with that quality and speed.
- inactive, on 05/07/2009, -0/+4Reverse splits? In my stock?
- staffa, on 05/07/2009, -0/+4A brokerage firm has no problem letting you own partial shares. You might not be able to redeem the share as a certificate though, but as long as it remains with the brokerage firm, it represents no problem.
- paulsmerdon, on 05/07/2009, -0/+4The math is very straightforward, but there is usually a negative reaction in the market when a company makes a move like this.
- paulsmerdon, on 05/07/2009, -0/+4Nortel Networks pulled this move twice in the past few years. In both instances, the share price quickly fell and the company eventually filed for bankruptcy a couple of months ago. It looks like GM is reading from the same playbook.
- j0hn33y, on 05/08/2009, -0/+3It will just take a little longer to get there now.
- inactive, on 05/07/2009, -1/+4Ouch! That's gonna leave a mark.
- LargeStack, on 05/08/2009, -1/+4Duke Nukem Forever
- loxics, on 05/07/2009, -5/+8What if you had less than 100 stocks already. What happens then?
- TheMachine1, on 05/07/2009, -9/+12Still a penny stock.
- kalvinb, on 05/07/2009, -1/+3I once bought stock at about 0.6 cents per share (not verizon math, actually 0.6 cents a share) which later reverse split 1 share for every 120 you owned.
So this isn't unheard of. The big reason for doing it is that some investing firms simply will not buy shares that are valued below a certain level. They won't buy your $1 stock no matter who you are. So some companies will reverse split to get above the threshold and possibly bring in loads of money from investment firms.
More than likely it's the last desperate move before they're off the market entirely. Sure your stock may be worth $100 a share on paper which means investment companies will look at you. The downside is that they know they're looking at GM. So while they now are technically allowed to invest in GM, they probably won't. - m0n0kr0m3, on 05/08/2009, -1/+3It's probably a step in the right direction though. They probably should have done this 8 years ago. A lot of stuff they're doing now they probably should have done 8 years ago. Oh well.
- NYankee2003, on 05/07/2009, -1/+3and who exactly are you going to borrow the shares from to short?
- nutsackninja, on 05/07/2009, -3/+5stev31h your right its better to let GM pay these workers over 100k a year from the bailout they received to sit on their entitled unionized asses while the plants are idle.
- inactive, on 05/08/2009, -0/+2paul: good points all around. When I look at a penny stock, I view it as more susceptible to going under than something at 100. 100 feels like you're more in line with a Berkshire Hathaway etc, which is what I'm sure GM feels like they "should be" at.
- fcruz1331, on 05/08/2009, -0/+2GTFO
- StillAnonymous, on 05/08/2009, -0/+2Hey Bifman, guess you missed the part where they're also issuing an additional 60 billion common shares, diluting the existing pool by a monstrous amount.
http://zerohedge.blogspot.com/2009/05/gm-is-offici ...
http://market-ticker.denninger.net/archives/1010-G ... - charbabe1980, on 05/08/2009, -1/+3They're plan is really just putting lipstick on a pig. This reverse stock split will consolidate shares and bring up the price to appear viable enough before they fall off the DJIA, but a traditional split will eventually be necessary to raise more capital. They also need to give themselves some margin for when investors dump their shares in fear of nationalization or BK. Time to sell? Probably not, how much more could we lose, really?
- inactive, on 05/07/2009, -1/+3True, but shareholders essentially are losing most of their voting rights, with the Federal Government and the UAW controlling 89% of the voting shares. That's a serious concern for investors.
- bringitontimx, on 05/08/2009, -2/+3how about they learn how to make a decent car first.
- randumbusername, on 05/08/2009, -1/+2with inflation you come out as a loser. with a stock split you don't.
- richid, on 05/08/2009, -0/+1Read the title, this is a reverse split. If you hold 100 shares before the split you will own 1 share after the split. In a normal 2:1 split you would double your shares after the split.
- BikeRidinMan, on 05/08/2009, -0/+1Guess they will need to change their commercials. Old commercial: Buy a new GM car and get 100 shares of GM stock. New commercial: Buy a new GM car and get screwed.
- pathouston22, on 05/08/2009, -0/+1Why don't you do some research on the Nano, moron.
- Cybrwolf, on 05/08/2009, -0/+1Why the ***** are people digging the parent comment down???
It is a 100 percent fair question! - AlbinoRaven, on 05/10/2009, -0/+1Makes for a great short though, by pass the uptick rules by proxy of a revere split.
-
Show 51 - 90 of 90 discussions
© Digg Inc. 2009
— Content created and posted by Digg users is