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GM stock drops to lowest spot since 1933

Tuesday, May 12, 2009

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Gabe Gutierrez
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DETROIT (WJRT) -- (05/12/09)--Shares of General Motors Corp. have tumbled to their lowest level since 1933.

Investors fear significant dilution of their stock values or bankruptcy.

GM shares dropped to $1.09 in early trading Tuesday. They closed at $1.15.

The drop comes a day after some of GM's top executives dumped more than $200,000 of their own shares.

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GM retiree Harvey Wheeler is worried these days. While GM's stock drop won't directly affect pension right away, he wonders what will happen as the automaker slides into possible bankruptcy.

"If they don't have money there, they're going to find a way to cut some kind of way, so they'll end up cutting my pension," he said.

On Tuesday morning, GM shares tumbled to their lowest level since 1933.

"We don't know what's going to happen," said retired GM worker Mildred Carlysle.

Carlyse was just a young girl during the Great Depression.

"Things are so bad now. It's going down. I just pray that things get better," she said.

It's no big surprise, but analysts are predicting that GM's stock prices will continue to drop as the automaker's June 1 restructuring deadline approaches.

"They're thinking it might be likely that the bondholders just decide to tough it out in bankruptcy court because they think the government might get a better deal than what GM's going to offer them," said University of Michigan-Flint economist Chris Douglas, PhD.

Douglas says he believes GM's regulatory filing Monday had a big impact on Tuesday's drop. It revealed that six top GM executives had recently sold more than 200,000 company shares.

"Two-hundred-thousand shares of stock might be enough to push the stock prices down a bit," Douglas said.

"But just that being made public, that top executives are bailing, would cause probably lots of individual investors to say, 'What do they know that I don't? I better bail, too.'"

Wheeler says he hopes they don't bail.

"(If they do), that will affect probably glasses, my health insurance, stuff like that," he said.