On Tuesday morning of the first official day after GM declared bankruptcy, the stock symbol changed to GMGMQ. What does this mean for GM stockholders? If you currently own GM stock or think it might be a bargain in the midst of this bankruptcy, there are few things you should know:
- The new stock symbol means you're ultimately trading a riskier stock.
The stock symbol changed because the New York Stock Exchange (NYSE) took GM out of its stock listings on Tuesday, the day after the bankruptcy was announced. The stock is now quoted through pink sheets, since GM no longer meets NYSE listing requirements. The new GMGMQ symbol signifies a pink sheets stock. Companies on the pink sheets system do not need to meet minimum reporting requirements or file with the SEC. This means they are generally vued as higher risk; they tend to have lower liquidity, making them harder to buy and sell. (For more on investing in pink sheet stocks, see Pretty In Pink Sheets.) You still can buy and sell GMGMQ stock via most U.S. brokers, including in-person and online financial planners. You aren't going to get much compared to your initial investment, but you can recoup a small part of your money while there is some value in the stock.
GM stock may stop trading altogether.
According to Pink OTC Market CEO Cromwell Coulson, when the bankruptcy is completed, the stock is canceled. Thus, GM investors may only have a small window of time to sell their stock before it becomes totally worthless.
GMGMQ will be a very high-risk play best left to savvy investors.
There is still trading going on. Those who bought GM short now have to get rid of their stock. Some investors like to buy stocks of bankrupt companies in the hope that the cheap stock may have the potential for high returns - especially if the bankruptcy judge gives some sort of consideration to common stockholders.
But, according to Coulson, buying any kind company stock in bankruptcy and trying to make a profit should only be done by the exceptionally financially savvy, who have the tools to examine the situation carefully. (For more on this strategy, see Taking Advantage Of Corporate Decline.)
GMGMQ shareholders are likely to be left empty-handed.
What's Coulson's advice about buying GMGMQ in the hope of a good bankruptcy settlement?
"Most likely shareholders will not get anything," he said. He also added that it's unlikely that GM will be a successful long-term investment going forward.