World Economy

GE Stock Wipeout Reaches $100 Billion

GE Stock Wipeout Reaches $100 BillionGE Stock Wipeout Reaches $100 Billion

A week ago, General Electric Co.’s new boss lamented the company’s “completely unacceptable” performance. Shareholders must be feeling the same way.

The fifth straight share decline pulled the stock down 13% on the week. That was GE’s worst weekly drop since March 2009, the month when the S&P 500 Index reached its recession-era nadir, Bloomberg reported.

With about $26 billion of market value wiped out over the past five days, the loss for GE shareholders this year has now reached $100 billion—more than the current market cap of Goldman Sachs Group Inc.

GE is the worst performer by far in the Dow Jones Industrial Average this year as it grapples with weak markets in power, oil and locomotives. The issues took center stage last week as the Boston-based company slashed its cash and profit forecasts while reporting earnings that fell well short of Wall Street estimates.

John Flannery, who took over as chief executive officer in August, is weighing all options to arrest the slide, including portfolio changes. Investors are also bracing for a possible dividend cut. Any reduction to the payout would be the first since early 2009.

Flannery, said in the company’s post-earnings call with analysts last week that on Nov. 13 he will provide a more detailed look at his plan to right the ship. The plan will include what businesses the company will focus on and what will be sold off, new operating processes, dividend and share repurchase targets and “how we communicate to investors,” according to a transcript provided by FactSet, MarketWatch reported.

At issue for investors is a plunging share price. The stock tumbled 2.6% in afternoon trade Friday, and was heading toward the lowest close since Dec. 28, 2012. It has plunged 12.9% this week, on track for the biggest weekly percentage selloff since the week ending March 6, 2009, at the depths of the Great Recession. It has now tumbled 34.3% year to date, while the Dow Jones Industrial Average has rallied 18.5%.

The company’s plan for a “back-to-the-basics” approach to reporting results comes after some pressure applied by the Securities and Exchange Commission. GE disclosed recently that it received a “comment letter” from the SEC in July, in which 16 items in its 10-K filing were listed as being potentially misleading to investors, with half the items mentioning the reporting of numbers that were inconsistent with Generally Accepted Accounting Principles.

Add new comment

Read our comment policy before posting your viewpoints