Industrials

General Electric shares drop to lowest level since July 2009

Key Points
  • General Electric stock continued this year's drop in trading Monday, slipping below $13 per share.
  • The company's stock hit its lowest point since July 2009.
General Electric drop to lowest level since July 2009
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General Electric drop to lowest level since July 2009

Shares of General Electric dropped below $13 in Monday trading.

In the absence of positive news, the company's stock fell as far as $12.86, the lowest level since July 2009. Pressure on GE has not let up this year, with the stock sliding more than 25 percent. A dismal 2017 saw company shares slide 42 percent.

GE lagged far behind the rest of the Dow Jones industrial average, which surged 650 points Monday with Microsoft the best-performing stock in the index.

A Wall Street Journal report Sunday looked into what investors truly know about the risks lurking within GE Capital's portfolio. The report said the unit still has assets it has been unable to sell, with the added possibility GE may be held liable for some assets it unloaded since the 2008 financial crisis.

The report also noted the conglomerate continues to use commercial paper, a type of short-term debt. Historically, extensive use of commercial paper caused GE to burn through funds in 2008. The WSJ found GE's average commercial paper balance was $17.3 billion during the most recent quarter.

In the midst of a restructuring effort, GE recently nominated three new directors, as it looks to downsize its board.

GE has completed its first flight test of the world's largest jet engine
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GE has completed its first flight test of the world's largest jet engine

But this year GE revealed two ongoing federal investigations: the SEC investigation into GE's accounting practices and the U.S. Justice Department investigation in connection with subprime mortgages.

Poor earnings performance has heaped further reminders of the challenges GE faces, with the most recent report again falling short of expectations. GE's 2018 earnings outlook, while stronger-than-anticipated, is half the $2 per share estimate touted by former chief executive Jeff Immelt less than a year ago.

GE is expected to announce a decision to break itself up as early as this spring, with a split likely, CNBC reported on Jan. 16.

Wall Street is eyeing GE's individual businesses closely under "sum-of-the-parts" analysis. While some see unknown risks justifying a value between $12 and $16 per share, others see a more optimistic future for GE's investors due to the history of past industrial conglomerate spin-offs.

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JPMorgan: GE still at risk, cuts price target to $11
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JPMorgan: GE still at risk, cuts price target to $11