General Motors shares hit a 76-year low today, one day after a group of its executives disclosed they had sold shares in the struggling manufacturer.
Six GM executives, led by former GM Vice Chairman and product chief Bob Lutz, disclosed on Monday that they sold almost $315,000 in stock and liquidated their remaining direct holdings.
The stock sale underscores the pressure on GM with less than three weeks remaining for it to win deals to slash debt and operating costs with the UAW and bondholders to avoid bankruptcy.
GM is headed for either a bankruptcy filing or an out-of- court restructuring that would wipe out current stockholders by flooding the market with new shares to pay off creditors.
The automaker’s stock could be worthless in a bankruptcy or worth less than 2 cents apiece if it proceeds with plans to issue shares to creditors led by the US Treasury Department.
“It’s a lose-lose situation as far as we see it, and the shares kind of seem to have been doing a levitating magic trick and just staying up there in the $1.50 to $2.00 range,” Standard & Poor’s equity analyst Efraim Levy said. “Given that there is a two-week deadline, coming there should be additional downside pressure.”
The automaker has historically been one of the powerhouses in the best-known measurement of US stocks, the Dow Jones Industrial Average. It has been on the index for 83 consecutive years and despite the dramatic fall in the price of its shares, Dow has still kept the stock as part of the index.
GM’s market capitalisation as of today was about $690 million, making it one of the smaller Dow members.
The company has lost $88 billion since 2004, including a $6 billion lost for the first quarter of this year.
The automaker’s shares fell 19.4 percent, or 28 cents, to $1.16 at 3:59 p.m. on the New York Stock Exchange. The stock had fallen to as low as $1.09 earlier in the day, the lowest since 1933.
GM was first listed on the Dow in 1915. It was removed before being added it again in 1925, and it has remained ever since. Only US conglomerate General Electric Co, which joined in 1907, has been there longer.