How is it significant that GM's diluted earnings per share is (today; 8/1/08) at -$83?

Question

That is an incredibly high diluted EPS!!! It is hard to find another company that ever even compares!!! What does that mean to potential investors? Is GM bankrupt? Compare that to, for example Ford that has diluted earnings per share (today) at -$5? Even NWA which is a "worst stock" on many blogs only has -$16/share!

Answer 1

I believe that it was stated that this was only the 3rd highest loss for GM.  Sort of makes one wonder.  Rick is patting himself on the back because it is only the 3rd highest.  Is GM bankrupt?  Come on. You can answer that question.  

Answer 2

GM is in bad shape. The only reason they are not bankrupt is because they have, and will have, enough cash flow to tide them over for a couple of years. There massive cash position and the excess capacity available for cost cutting allows them to stay afloat.

It was stated early today that owners equity in GM is now -$57 billion. That is probably one of the highest (or should I say lowest?) negative owners equity figures even for a company that is not in, or about to enter, bankruptcy.

For current investors the situation is grim, however, many do believe that GM will be able to recover. If their planned asset sales are successful and they are able to create new products while riding out the current economic downturn there is a reasonable chance that they will recover. Basically, what this means is that you have to be very careful when currently investing in GM; it's risky out there!  

Answer 3

Auto stocks historically tend to be cyclical - a few good years then a few bad years, etc.  Just looking at EPS might not tell the whole story, but looking at the financials GM hasn't shown a profit since 2004 and is now about 40 billion in the red.

Maybe they'll hit another up-cycle soon.  I'm sure as heck not buying, though.