Is General Electric Now Major Wrecktric?
I was shocked this week after the General Electric (GE) shareholders voted to approve a 1-8 stock split. It got me thinking, "Is General Electric Now Major Wrecktric?"
Typically, reverse stock split happen with penny stock. Had General Electric fallen to being a penny stock? No. But it has fallen towards being a penny stock.
The stock price has after it plummeted from $32.67 in 2000 to a recent low of $5.48 last year in the pandemic sell off. The current price is $12.78. Since Jack Welch left the company, there have been three CEOs. Two of which, Jeffrey Immelt and John Flannery, have been unable to turn the stock price around. Immelt actually probably is 75% responsible for the destruction of General Electric. Jack Welch gets 25% of the blame for setting up Immelt for failure with expanding into too many businesses.
Flannery was capable enough to turn the company around but was not given the time to do so. Investors got impatient and canned him. Now the CEO is Larry Culp who has had the reigns since 2018. Divisions have been sold here and there by Culp but he has not been able to right the ship and return it to the earnings machine it was in the 1990s.
Now Culp is about to make his worst decision and have a reverse stock split. Such events do not work. The stock will likely sink after the reverse split and this is sad. Instead of having a reverse stock split, Culp should focus on the turnaround that has still yet to materialize as Industrial stocks outperform the market.
We recommend this has a sell. Run Forest Run. Larry Culp will prove to not be capable of fixing General Electric and instead will be culpable for the destruction of what was once a great American company.