GE’s Bumpy Ride
One company that has been a disappointing investment in the past year has been industrial giant General Electric Company.GE has been one of the blue-chip stocks in the U.S. market for more than a century and was one of the original Dow Jones Industrial Average components. But a difficult energy environment coupled with some questionable accounting, ill-timed investments and poor balance sheet management created a perfect storm for GE investors in recent years.
GE’s latest bold decision was announced in November when the company said it plans to break into three separate companies focused on aviation, health care and energy. GE said investors can expect spin-offs of its health care unit and energy unit to be completed in 2023 and 2024, respectively.
GE also completed an 8-for1 reverse stock split on July 30, 2021.
At the beginning of 2020, GE shares were trading at a split-adjusted price of $89.84. By the beginning of March, the stock was still trading at around the same level even after news of COVID-19 spreading in China prompted concerns about a U.S. pandemic. On March 18, GE shares dropped all the way down to $47.20 in intraday trading. The stock ultimately hit its pandemic low of $43.84 in May after the company said it was cutting 13,000 aviation jobs.
In October 2020, GE investors were hit once again by the company’s legacy accounting issues when GE reported it had received a Wells Notice from the SEC indicating the regulator may take civil action against the company related to an ongoing investigation into its power and insurance businesses. Fortunately, GE agreed to pay a $200 million fine to the SEC in December that officially ended all ongoing investigations.
GE in 2022, Beyond
The stock ultimately hit its post-pandemic high of $116.06 in November 2021, before pulling back to $93.27 following news of the breakup.GE investors who bought one year ago and held on haven’t generated much of a return for their patience. In fact, $1,000 in GE stock bought on January 24, 2021, would be worth about $1,087 today, assuming reinvested dividends.
Looking ahead, analysts are expecting GE shares to rebound in the next 12 months. The average price target among the 18 analysts covering the stock is $123.50, suggesting a 32 percent upside from current levels.
