agent Entrepreneur logo
MenuMENU
SearchSEARCH

Treasury Takes Initial Public Loss on GM Shares

November 18, 2010
3 min to read



WASHINGTON - U.S. taxpayers are about $10 billion in the red on their General Motors Co. investment after Wednesday's initial public offering. Whether the Treasury can ultimately break even will depend on how GM shares perform over the next few years, reported The Wall Street Journal.


The Treasury Department agreed Wednesday to sell 358.5 million of its common shares in GM at $33 a share, senior Obama administration officials said.

Ad Loading...


That sale raised $11.8 billion for U.S. taxpayers. It also valued the Treasury's entire 61 percent stake in GM - including the shares it sold - at about $30 billion.


The Treasury paid about $40 billion for the 912 million common shares it held at the start of the day Wednesday. To get that all back at once, the Treasury would have had to sell all its shares at about $43.85 in the IPO.


After the IPO, the Treasury Department retains about a 37 percent stake in GM. The remaining 554 million common shares the government owns have an indicated value of about $18.3 billion at Wednesday's IPO price.


The Treasury can't sell any additional shares for the next six months under the terms of the IPO.


To recover its full investment in GM, the government's remaining stake would need to reach a value of about $28.2 billion, or nearly $51 a share, on average. The Treasury is expected to sell off its remaining shares over time based on market prices.

Ad Loading...


The U.S. poured a total of $49.5 billion into GM last year to usher the Detroit auto maker through bankruptcy reorganization. The government has since recouped about $9.5 billion of that money as GM repaid loans, made interest payments and repurchased preferred stock from Treasury.


President Barack Obama on Wednesday said General Motors's initial public offering marks a "major milestone" not just for the company but for the entire American auto industry.


Mr. Obama has touted the administration's investment in GM, saying it saved hundreds of jobs at a time when the economy was on the brink of collapse. "Supporting the American auto industry required tough decisions and shared sacrifices," Mr. Obama said in a statement. He added, "But it helped save jobs, rescue an industry at the heart of America's manufacturing sector, and make it more competitive for the future."


Senior Obama administration officials, who spoke on the condition that they not be named, said the administration's decision to sell at a price below break-even reflected an urgency to get the U.S. government out of the auto business. The extraordinary government intervention at GM has been politically problematic for the administration, and GM officials have expressed concern that the government ties have hurt sales.


Treasury officials said they are aiming to recover as much money as possible with future sales of GM shares.

Ad Loading...


"We believe that proper balance was found" in finding a share price that returned taxpayer money while quickly exiting GM, said one administration official. "We view this as an important major milestone in our long-announced objective to exit this investment as soon as practicable."


More Industry

hand signing paperwork on a clipboard on top of a desk with a gavel to the side

Senators Propose Chinese Connected Car Ban

Just weeks before President Trump is set to meet with the Chinese president, two U.S. senators proposed a bill with the aim of protecting Americans’ data.

Read More →
Photo of work team at a U.S. Subaru hybrid vehicle plant
Industryby Hannah MitchellApril 30, 2026

Consumers Gravitate to Hybrids

A study of Q1 used-vehicle sales shows many consumers are looking to minimize fuel costs but aren’t willing to go all electric and no longer have a tax break incentive to do so.

Read More →
family in a car, Affordability Out the Window, Auto Dealer Today
Industryby Lauren LawrenceApril 24, 2026

Bad Credit Tanks Attainability

A recent study suggests expectant parents are feeling the burden of bad credit more than other demographics when it comes to buying a new car.

Read More →
Ad Loading...
Photo of two men in suit jackets shaking hands next to new car inside of a dealership
IndustryApril 23, 2026

A New Consumer Culture in the Auto Dealership

Dealers should aim to build a positive work environment, helping employees execute an efficient experience, from their online research to the final delivery of the vehicle.

Read More →
Closeup of the side of an Audi car
Industryby Hannah MitchellApril 23, 2026

New-Vehicle Sales Down

A cloudy April forecast was expected due to last April’s sales surge in anticipation of U.S. trade tariff-inflated prices. Meanwhile, automakers pumped up incentives to address today’s consumer wallet woes.

Read More →
Photo of Ford F-150 grill with nameplate
Industryby Hannah MitchellApril 20, 2026

Will Extended-Range Autos Make Inroads?

EREVs, also known as ‘series hybrids,’ may catch on in the U.S., where they currently have barely a toehold, as automakers tilt away from some purely electric models and consumers crave more range.

Read More →
Ad Loading...
Photo of Cadillac Lyriq SUV on road with partly cloudy sky in background
Industryby Hannah MitchellApril 16, 2026

Used Autos Selling for More

A recent price spike due to several larger market forces, though it hasn’t dulled demand, is pushing more consumers to efficient models to squeeze in buys.

Read More →
Photo of facade of Waldorf Toyota car dealership
Industryby Hannah MitchellApril 16, 2026

Maryland Auto Group Sells

A group out West picked up the major D.C.-area collection, putting it in the upper tiers of private automotive groups in the U.S.

Read More →
Line graphic showing Cox Automotive's March Credit Availability Index status
Industryby Hannah MitchellApril 13, 2026

Auto Lending Opens Up in March

Lenders loosened access for subprime borrowers, and consumers with negative equity reached a record high, Cox Automotive reported.

Read More →
Ad Loading...
electric vehicle next to an urban charging station. EV Demand Diverges. F&I and Showroom logo
Industryby Lauren LawrenceApril 10, 2026

EV Interest Varies Regionally

U.S. consumer interest in electric vehicles lags behind other countries despite the rising gas prices caused by the ongoing war in the Middle East.

Read More →