GM Heads Higher on $4 Billion Debt Offering

The stock just came off a well-received earnings report earlier this week

Deputy Editor
May 8, 2020 at 9:30 AM
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The shares of General Motors Company (NYSE:GM) have been in rally mode this week, helped along by a well-received quarterly earnings report on Wednesday, and with the carmaker back in the spotlight today, it looks like GM isn't slowing down. The stock is up 2% at $22.89, after the firm priced a new debt offering totaling $4 billion. This offering consists of $1 billion in notes due in 2023, $2 billion worth of notes due in 2025, and $1 billion in notes due in 2027. The offering is set to settle on May 12, and GM said it would use the proceeds from the sale to fund general corporate purposes. 

GM has had a less-than-stellar run on the charts lately, with a bear gap sinking the equity below the $30.50 mark on Sept. 21.In fact, yesterday's session saw General Motors stock close at its lowest level in a month, also solidifying the equity's position below its 40-day moving average. Longer term, GM sports a 43.9% year-to-date deficit. 

Analysts are eyeing more upside for GM, too. The 12-month consensus price target of $34.47 is a whopping 50.3% premium to last night's close. Plus, of the 10 covering General Motors stock, seven call it a "buy" or better, while the remaining three say "hold."

Options traders haven't been as quick to join the bullish bandwagon. This is per GM's 10-day put/call volume ratio of 1.07 at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 75% of all other readings from the past 12 months, suggesting a healthier-than-usual appetite for long puts of late. 

Echoing this, GM's Schaeffer's put/call open interest ratio of 1.1 stands in the 90th percentile of its annual range, implying short-term options traders have rarely been more put-biased. Drilling down, peak open interest of just 30,085 contracts sits at the May 20 put.

 

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