GM’s stock keeps trading but is probably worthless
Although shares of General Motors Corp. have almost certainly been made worthless by the carmaker’s entry into Chapter 11, the stock’s price actually resurged from its lows Monday.
At a news conference after the bankruptcy filing Monday, GM Chief Executive Fritz Henderson said existing common shareholders would lose their investment “in entirety.”
But GM shares, after plunging to 27 cents when the market opened, jumped as high as $1.01. They closed at 75 cents, unchanged from Friday’s close.
Who would buy a worthless stock? Aside from day traders trying to make a buck in a few minutes or hours, mutual funds that track the Standard & Poor’s 500 index could have bought GM on Monday if they had new investor money to put to work. That’s because GM was still a component of the index; S&P; said late Monday that the index would drop GM at the end of trading today.
Also, short sellers who previously borrowed GM shares and sold them, betting on a collapse, may have bought shares to pay back their loaned stock.
Whatever the reason, traders often will play with a worthless stock as long as they’re able.
But they will no longer be able to on the New York Stock Exchange, which said it would delist the stock after Monday’s session. The shares still will be traded in the electronic “pink sheets” at pinksheets.com.
--
