But even with the increase, GM's value is still short of what the government needs to recover the whole bailout.
During the past two weeks, investor interest in GM has risen as the company's executives flew across the globe making sales pitches to big investors. The company has made profits for three straight quarters and thinks earnings could increase even more if the U.S. auto market rebounds from a 30-year low last year.
GM announced Tuesday that it would raise the price range for common stock being sold this week to $32 to $33 per share, up from the range revealed two weeks ago, $26 to $29.
At $33 apiece, the total value of the 1.5 billion outstanding GM shares would be nearly
$50 billion, up $6 billion in the past two weeks. That's a huge improvement but still short of the $65.6 billion market value needed for the government to get back all of the taxpayer dollars it used to get GM through a painful bankruptcy restructuring.
The government, which became GM's biggest shareholder when it gave the automaker $50 billion to get through bankruptcy, hopes to get the money back through the IPO and several follow-up sales that could take two or more years.
The share price increase and the rising market value are good news, though, because they reduce the amount of money the government has to earn back in the follow-up sales after the IPO, said Joe Phillippi, president of AutoTrends Consulting in Short Hills, N.J.
"If GM performs as expected, the stock will steadily improve in valuation," rising to $45 or more in the next year, he said.
Shares may riseBankers handling the GM stock sale, which is planned for Thursday, probably will exercise an option to sell 15 percent more shares from the government and two of GM's other owners, the combined Canadian and Ontario governments and a union health-care trust fund. That could bring in even more money.
At the high end of the new price range, $33 per share, the government could reap as much as $10 billion in the IPO. That's $2.3 billion, or about 31 percent more than it would have made two weeks ago.
If the IPO generates $10 billion for the government, GM would still be on the hook for $30 billion in taxpayer dollars. The U.S. would hold roughly 609 million shares after the IPO. If it sold all of those shares at $33, it would make $20 billion, falling $10 billion shy of getting all of the money back.
But analysts say GM's share price probably will rise above $33 once it begins trading on the New York Stock Exchange under the company's old symbol, GM. The shares should rise, they say, as auto sales continue to slowly improve during the next few years. If the shares get to $50, the government will get back all $30 billion left from its original $50 billion bailout.
.tweetbutton { margin-top: -3px; margin-right:-18px; }Real Estate Outlook: Small GainsGM to sell $13 billion in upcoming IPO
