General Motors (NYSE: GM) is losing the race against the economic downturn. Today the largest U.S. automaker faced another knock down from the analysts, driving the stock to its lowest level since September in 1954.Merrill Lynch (NYSE: MER) said that General Motors will be short of $15 billion in cash. On top of that, the investment bank said bankruptcy is "not impossible" if the auto market continues to slump.
"Bankruptcy is not impossible if the market continues to deteriorate and significant incremental capital is not raised," the Merrill analysts wrote.
Additionally, Merrill cut its forecast for 2008 for total U.S. auto sales to 14.3 million from 14.8 million, and for 2009 to 14 million from 15.3 million.
"We believe that the weakness in demand and deteriorating mix through the first half of 2008 are just the beginning of what is shaping up to be a more severe downturn than even the most bearish industry observers expected," the Merrill analysts noted.
GM is losing the race
In its first-quarter GM reported a net loss of $3.3 billion, or $5.74 per share in the first quarter of 2008, compared with a net loss from continuing operations of $42 million, or $.07 per diluted share, in the year-ago quarter.
The company in its first-quarter report noted that it has enough capital to meet its needs this year.
Reference
www.gm.com
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