Why does GMGMQ still have any value?
Why does stock of company that declared bankruptcy still have value?
Best Answer
989 points
rvilmur answered 5 months ago …
Those investors that shorted GM have to buy back their borrowed stock to realize their gain now unless they are willing to wait until the end of the year to declare it worthless on their tax returns. This makes a market of buyers for the unlucky owners of the bankrupt stock.
Because GM has much more senior borrowed money than assets, there will be nothing left for the old shareholders when GM comes out of bankruptcy.
Answers
2082 points
alanj answered 5 months ago …
They filed chapter 11 not chapter 7. But, even if it had been chapter 7 they still have assets that have value. They are re-organizing, they are not going out of business. It might be a smaller company. Someone will buy if the price is right.
As far as the stock- Even if the company had no value as long as you have a buyer who thinks it has value and wants to buy stock and you have a willing seller that will sell. The stock will trade.
102 points
milveh answered 5 months ago …
Every stock has value as long as it has potential and GMGMQ has good potential for a recovery after reorganizing under Chapt. 11. The more potential a stock has for earning equity the more value it has in the present day. Almost every stock I know is valued on it's future performance as much as it's current performance. This makes a stock's [potential] almost as important as a good P/E or P/S ratio. Currently GMGMQ is considered greatly undervalued based on it's future potential and it's stock price has been trending up with strong momentum.
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