Should I Buy the New GM Stock at Its Current Price?

While General Motors has undergone some drastic and dramatic changes in the last few months to its operating structure following its bankruptcy, many investors are asking whether now is the right time to buy the new GM stock.  While the prospects for a profitable GM are much better than they were at the beginning of the year, there are still many hurdles to investing in GM stock.

First off, General Motors Chapter 11 filing is not going to wipe it clean of all its debts.  In fact, any bankruptcy finding that leaves GM as a mainly intact company will undoubtedly include stipulations for the repayment of GM's large amount of creditors.  These repayments are going to ensure that the equity owners of the new GM stock will not see dividend payments for quite some time. 

On top of this, the New GM as a company is going to be up against some stiff competition, not just from Ford and overseas automakers but from itself.  That's right, in this slowing economy GM built up some impressive inventories of cars which it did its best to get rid of before bankruptcy, however the demand from consumers is still not there.  Because of this glut of cars still sitting in storage lots and on dealer's floors, its going to be very hard for the new GM to produce cars and sell them with decent profit margins.

Should I Buy the New GM Stock at Its Current Price?

Overall, the future for GM's stock price and its current outlook is still subpar at best.  The failed efforts of Rick Wagoner and the Washington boys to save GM this past fall and into the spring should make anyone stand up and take notice.  If General Motors business plan couldn't be saved with all of that weight thrown behind it, then what will it take to create a truly profitable American automaker?

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