General Motors shares hit a symbolic milestone this morning, rising past their initial public offering price of $33 for the first time in more than two years.
The stock was trading at $33.29 on the New York Stock Exchange at 10:30 a.m. The last time it closed above $33 was May 4, 2011.
It’s a particularly meaningful moment for investors who bought shares on the day of the IPO and have been waiting for two and a half years for the stock to erase its losses.
In July 2012, the stock dipped below $19 as investors questioned the company’s strategy in Europe, prompting CEO Dan Akerson to buy 25,000 shares in August as a gesture of faith in the company’s prospects.
Breaking through the IPO price is nowhere near enough for the U.S. government to recover all of taxpayers’ $49.5 billion in emergency assistance provided to the automaker in 2009 as part of its bankruptcy restructuring.
The government, which plans to sell the rest of its GM shares by early 2014, owns about 16%, down from 26% last year. The Treasury Department’s remaining shares would have to be sold at an average price of more than $75 for taxpayers to break even.
The recent increase in the stock price —14% since the beginning of 2013 — does reflect growing investor confidence that GM’s recovery has demonstrated sustainable traction despite ongoing losses in its European operations.
“GM, while still beset with issues, is generally executing better than investors give it credit for,” Barclays analyst Brian Johnson said in a recent research note.
Earlier this month GM reported a first-quarter profit of $1.2 billion. Its highly profitable North American operations should improve this year as the company begins selling redesigned versions of its Chevrolet Silverado and GMC Sierra pickup trucks, two of GM’s most profitable vehicles.
The automaker also expects to break even in Europe by mid-decade, which would end an annual losing streak that dates back to the late 1990s.
Greg Gardner and Nathan Bomey, Detroit Free Press.
