Ford Stock Rally Could Be Boon to GM IPO
Ford Motor Co.'s emergence as Detroit's darling may have fueled jealousy at General Motors Co. headquarters, but the archrival's rising shares could help GM as it readies its landmark return to public markets, Reuters reported.
As GM's only major U.S.-listed rival, Ford is the company investors and bankers are turning to as they debate the largest U.S. automaker's theoretical value ahead of the high stakes IPO scheduled for soon after next week's U.S. mid-term elections.
There are several ways to calculate value for GM, including using a multiple of its projected cash flow based on Ford's multiples, or doing an implied value calculation based on where GM bonds are trading.
Initially, GM's IPO -- just over a year after the automaker's bankruptcy -- was widely expected to weigh on Ford's shares, which have appreciated sharply since hitting a record $1.02 low in November 2008 and were trading around $12 when news of GM's stock float first began to circulate in May.
Ford executives were repeatedly asked to assess the risk that mutual funds and other institutional shareholders might "rebalance" their portfolios, dumping Ford stock and buying GM.
"Just mathematically, a lot of mutual funds and other investment entities will probably spread their investment out over the sector more," Ford Executive Chairman Bill Ford told reporters in August, two days after GM filed the initial paperwork for its IPO with the U.S. Securities and Exchange Commission.
Whether GM benefits -- and Ford suffers -- from investors diversifying their autos holdings will not be determined until after GM's debut in mid-November. But in the meantime, Ford's share rally and a broad rebound in auto industry stocks across the board are helping GM's valuation.
Ford, which posted losses totaling $30 billion from 2006 through 2008, has emerged as the strongest of Detroit's "Big 3" automakers under a turnaround plan led by CEO Alan Mulally.
Its stock hit a six-month high of $14.47 on Tuesday when it impressed investors with a $1.7 billion profit for the third quarter.
More Industry

Pennsylvania Dealership Under New Retailers
The sale of the Chrysler Dodge Jeep Ram store puts a family auto group on a leaner path as first-time dealers take the helm.
Read More →
Battery Storage Takes Priority Over EVs
U.S. automakers are prioritizing battery energy stationary storage over electric-vehicle production as the consumer demand for EVs lags the rest of the world.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
New-Vehicle Sales Picture Relative
A May forecast is complicated by last spring’s trade tariff effects on auto retail. Despite continued hard realities, many consumers took advantage of ways to bite the bullet.
Read More →
Auto Group Acquires Third Nissan Rooftop
Iowa-based Coleman Automotive Group recently acquired its seventh dealership, McGrath Nissan, which it renamed Nissan of Elgin.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Building an Extraordinary F&I Agency
Work to determine your specialized talent, because that fact will determine everything about your agency’s future.
Read More →
Recipe for Compliance
The secret to both amazing barbecue and compliance is the same: understanding the basics and committing to a process.
Read More →
EVs Getting More Attractive
A growing percentage of U.S. consumers are open to switching and fewer are adverse to the idea, according to a recently completed survey. That’s despite the end of a tax break.
Read More →
EV Sales Drop in April Following Surge
North American electric-vehicle sales were down 28% year-over-year, a sharp contrast from global EV sales growth of 6%.
Read More →