General Motors was the world’s number one automaker in 2011 and this year, its share value has increased by more than 25 percent to around US$25.50. The good news is that this figure outperforms the Standard & Poor’s 500 index 16 percent rise; the bad news is that it falls below its 2010 public offering of US$33 per share.
Its cash-burning European operations and the alliance with PSA Peugeot Citroen, which has still not crystallized, along with worries over China’s new car market rate of growth slowing down are, according to Reuters, making Wall Street nervous.
Moreover, there are worries that CEO Dan Akerson is not changing GM’s culture as fast as he promised and that the U.S. Treasury’s 26 percent stake in the company is “holding it back”.
GM's stock is rated as “buy” by many securities analysts, as the group plans to refresh or replace more than 70 percent of its U.S. line-up until the end of next year and Akerson is trying to reduce bureaucracy.
"People thought this new company would have this new sense of energy and momentum and in both cases you don't feel it", Citi analyst Itay Michaeli told Reuters. Nevertheless, he rates GM stock a "buy" as he considers it undervalued and believes that management has handled the European crisis quite reasonably.
On the other hand, Morgan Stanley’s Adam Jonas, who has said that GM should get rid of Opel ASAP, rates the stock as “overweight”.
Probably the truth lies somewhere in the middle; as Gabelli & Co. analyst Brian Sponheimer points out, “They’re moving in the right direction, but…there’s still a lot of wood to chop.”
By Andrew Tsaousis