What would happen to shares of GM if.......?

  • Thread starter Thread starter James G
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James G

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I have shares in GM. Recent news states the deal gives the government preferred shares of the company or 20 percent of the bailout loan if the government decides to. Would this dilute shares of GM?
 
No, preferred shares are different from common stock.
The reason the government is buying preferred shares in the financial companies they bailed out and also automakers if the deal passes is because of the following:
-Preferred shares cannot vote
-They are first in line to receive all or if any of their money back if the company files for bankruptcy
-Preferred stock gets dividends before common stock
So it isn't really a bailout, it's an "investment" and the gov't cant sell that stock for at least however long they specify in the deal.

If anything common stock shares will go up if the government buys stock in GM because it's raising more money for the company to expand/rebuild what they have lost.

(Remember buying stock is buying ownership in a company, and the money coming in from buying those preferred shares goes to the company's funding.)
 
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