Quote:
Originally Posted by DGthe3
And nothings changed in the past 10 years, right? Well nothing except for reduced cost. And drastically reduced debt. And improved quality. And excellent product. And fewer brands. And they're making way more money per vehicle sold. What else am I missing that might be a sign to investors that they're way better off than they were as little as 2 years ago, let alone 10?
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The point is that an IPO is limited in scope. How do we know that those GM shares should really be worth $26? It's not the same as normal stocks trading on the NYSE because those have been on the market for years, and therefore the market has decided a general equilibrium of stock prices, until of course new news and expectations come out. But the market has not decided that GM is worth $26 a share, a few I Bankers have, and therefore it would be a huge gamble to buy at that price, since the market may have a very different view of things than the few I Bankers. It's nearly impossible to accurately predict the expected price of a stock on the market until it's already on the market, hence why IPO's in general are risky
Note that this has nothing to do with the nature of the company, it's just the nature of an IPO.