GM: General Misunderstanding about the stock

There shouldn't be anyone left on the planet that doesn't know GM went bankrupt. At least not amongst people who might buy and sell stocks. It came to me as some surprise then, when I checked GM's stock price today, that it was actually up. The stock was up 2.5% today to a whopping $0.52 per share! Lest you think only a few shares traded hands, some 32 million shares traded today and has averaged about this volume since filing chapter 11. That's $16 million of GM stock trading each day. (By the way, the name of the "old" GM was changed to "Motors Liquidation Company" under ticker symbol "MTLQQ").

Having gone Chapter 11, the old stock represents a claim on the settlement between those owed money and the assets of the company. Since GM filed bankruptcy with assets of just $82 billion compared to debts of $173 billion, common shareholders would be awfully optimistic to expect the stock to be worth anything at all. It isn't worth any more than the paper the certificates are printed on and certainly not the ~$10 trading commission to buy them. Are people buying them just to have paper certificates issued as keep sakes? I checked with a trading desk and it turns out that if you bought shares today for delivery, they would be delivered reading "Motors Liquidation Company" and not "GM".

In fact, GM's website clearly distinguishes between the "new" and "old" GMs (emphasis mine):

General Motors Company (the "new GM") currently has no publicly traded securities. Please note that none of the publicly owned stocks or bonds issued by the former General Motors Corporation (now renamed "Motors Liquidation Company"), including its common stock formerly traded on the New York Stock Exchange under the ticker symbol "GM", are or will become securities of General Motors Company, which is an independent separate company.

Then it redirects you to the Motors Liquidation Company website where they say (emphasis mine):

Management continues to remind investors of its strong belief that there will be no value for the common stockholders in the bankruptcy liquidation process, even under the most optimistic of scenarios. Stockholders of a company in chapter 11 generally receive value only if all claims of the company's secured and unsecured creditors are fully satisfied. In this case, management strongly believes all such claims will not be fully satisfied, leading to its conclusion that the common stock will have no value.

When is the last time you saw a management team tell its stockholders the stock is worthless? Either people are buying stock not understanding even the simplest facts about the company they invest in or are gambling on a penny stock or possibly the stock is being pumped by some devious operators. Time will tell, but people should not be buying this stock.