GM shares fall to lowest level since 1950
DETROIT (Reuters) - General Motors Corp shares fell as much as 21.6 percent to their lowest level since 1950 on Thursday amid financial market turmoil and the car maker's report of European sales declines through the first nine months of 2008.
GM, whose shares fell as low as $5.42 on the New York Stock Exchange, blamed the credit crisis and inflation for hurting consumer confidence in Europe, where its sales have declined 1.9 percent in 2008 through September.
GM, the largest U.S.-based automaker, posted a $15.5 billion net loss in the second quarter and announced plans in July to cut costs by about $10 billion. The company has been restructuring in North America to meet increasing demand for more fuel-efficient vehicles.
An investment banker who declined to be identified attributed the share decline to elimination of short-selling restrictions on the shares that had put the equity value out of balance with bond and credit-default swaps values.
"It all has to rebalance now," the banker said.
The stock decline comes as influential industry forecasters J.D. Power and Associates and Global Insight lower auto sector expectations for 2008 and predict a slow recovery.
"While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse," said Jeff Schuster, J.D. Power's executive director of automotive forecasting, in a statement.
J.D. Power cut its 2008 U.S. light vehicle sales forecast to 13.6 million units and said it expects sales to fall to 13.2 million units in 2009. Global Insight on Wednesday cut its 2008 U.S. auto sales outlook and warned that a recovery toward more normal levels may not occur until 2013.
Citigroup also cut GM and Ford Motor Co to "sell" ratings on Wednesday.
Ford shares fell 20 cents, or 7.5 percent, to $2.46 on Thursday. Ford stock had reached its lowest level in a quarter century on Wednesday, falling as low as $2.10.
GM shares were off $1.01, or 14.6 percent, at $5.90.
(Reporting by David Bailey and Soyoung Kim in Detroit and Jui Chakravorty Das and Euan Rocha in New York; Editing by Brian Moss)
