Avoid Ally Financial (NYSE: ALLY) Stock Following IPO

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The Ally IPO got off to a weak start today (Thursday), when shares of Ally Financial Inc. (NYSE: ALLY) dipped 4% in the company's public debut.

On Thursday morning, ALLY shares opened at $24.25 – 3% lower than the stock's offer price of $25. That offer price came in at the low end of Ally's projected range of $25 to $28.

In the afternoon, ALLY traded as low as $24 – more than 4% below its offer price.

NYSE ALLYIn today's deal, Ally raised nearly $2.38 billion by offering 95 million shares. While that makes it the largest U.S. IPO of 2014 so far, it still registers as a disappointment. The company was projected to raise $2.5 billion.

Ally Financial is a Detroit-based auto-loan provider and is a former subsidiary of General Motors Co. (NYSE: GM). Ally was the recipient of a federal government bailout in 2008, and all the shares offered in today's IPO belonged to the U.S. Department of the Treasury. Ally Financial did not profit from the deal.

The U.S. Treasury Department sold 20% of its stake in Ally Financial and now owns just a 17% stake in the auto lender. Following the 2008 bailout, the Treasury Department owned as much as 74% of the company, then known as General Motors Acceptance Corp. (GMAC).

"With this offering, taxpayers have now recovered more than they invested in Ally," Treasury Undersecretary Mary Miller said in a statement today.

Through the Troubled Asset Relief Program (TARP), the U.S. government provided Ally with a $17.2 billion bailout. Ally has already paid back about $15.3 billion of that total, so today's $2.38 billion IPO covers the rest of the money taxpayers had initially doled out.

Ally may be out from underneath its bailout debt, but there are still some troubling issues surrounding ALLY stock moving forward…

Why Ally (NYSE: ALLY) Stock Is a Bad Bet

Slipping more than 4% in its debut was bad enough for investors, but it's just the start of ALLY's worries.

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