Bloomberg is reporting that General Motors’ days in the Dow may soon be over. With the relatively poorer performance than everyone else, and a remaining 0.20 weight on the index, the automaker may soon find itself driving out of the index.
“There are two choices for GM: bankruptcy or increased government ownership,” John Prestbo, the editor and executive director of Dow Jones Indexes, said in an interview yesterday. “Definitely the trend is in the direction that would force us to remove it.”
If the automaker is to remain represented, Ford might be chosen to enter the Dow as the other one leaves. Having been in the Dow since 1925, GM currently stands at $1.60, a more than 90% decline from last year. giving it a 93 percent loss in the past year.
Citi might escape this trouble given the amount of bailout it has received. Then there’s the stress test results to be released today. With the right amount of capital, the bank is almost certain to pass and its stock increase in value. At the moment however, it is still one of the lowest priced stock in the Dow Jones.