Deutsche Bank analyst Rod Lache has reduced GM’s stock to sell and put a price target of $0 a share. As a result, GM’s shares fell 31 percent to their lowest level in more than 55 years. The stock fell to $3.02 at one point, down $1.34 a share, and recovered this morning to $3.27 – down 25 percent.
“Without government assistance, we believe that GM’s collapse would be inevitable, and that it would precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailers, and sectors of the U.S. economy,” Lache said. “As part of GM’s restructuring, we are also convinced that a large number of stakeholders who are senior to GM’s equity will have to settle for pennies on the dollar.”
Lache said that GM needs at least $10 billion in government loans to survive until 2010. GM reported a loss of $2.5 billion in the third-quarter on Friday and said that it may not have enough cash to survive after the second-quarter of 2009.
Another analyst at Barclay Capital, Brian Johnson, put a price target of $1 a share on GM.
Source: Detroit News