The purpose of the reverse stock split was to reduce the number of our outstanding shares of common stock to levels that are better aligned with companies of GE’s size and scope and a clearer reflection of the GE of the future, not the past.
Why is GE stock so low?
The company had previously anticipated $300 million to $500 million worth of negative impact on free cash flow from the pandemic. So, in terms of free cash flow, things were at least twice as bad as the company had expected. And of course, the stock market loathes negative surprises, so now we’ve got an ultra-low GE stock.
When is Ge going to split up?
The company will be divided into separate units focused on aviation, health care and energy. GE plans to spin off the health-care unit by early 2023 and the energy unit by early 2024, the company said in a news release. GE shares, which are already up 55% over the last 12 months, jumped 12% in premarket trading
When will GE stock split?
GE plans to file an amendment to its certificate of incorporation to effectuate the reverse stock split after the close of trading on July 30, 2021, and GE common stock will begin trading on a split-adjusted basis on August 2, 2021.
When will GE split?
THEY Employees of Boston-based General Electric are holding a Valentine's Day protest against the company's plan to split into three separate entities.Workers say executives haven't explained how the breakup of the company will impact unionized employees.
What happened to GE stock reverse split?
General Electric (NYSE:GE) announced a reverse stock split, with eight shares turning into one. Since the mid-June announcement, GE stock has gone nowhere.
Is a reverse stock split good?
Per-share price bumping is the primary reason why companies opt for reverse stock splits, and the associated ratios may range from 1-for-2 to as high as 1-for-100. Reverse stock splits do not impact a corporation's value, although they are usually a result of its stock having shed substantial value.
Did GE reverse split get approved?
The reverse stock split, authorized share reduction and par value reduction were approved by GE shareholders at the annual meeting of shareholders on May 4, 2021.
Should I sell before a reverse stock split?
Investors who own a stock that splits may not make a lot of money immediately, but they shouldn't sell the stock since the split is likely a positive sign.
Who benefits from a reverse stock split?
A reverse stock split reduces the number of a company's outstanding shares and proportionally increases the share price. While a higher share price can help to boost a company's image, reverse splits are generally received by investors as a potential sign of fundamental weakness.
What was the price of GE stock before the reverse split?
The reverse split multiplied the price of the stock investors own by 8, but also reduced the number of shares they owned, by dividing the number by 8, MarketWatch reports. The pre-split-adjusted price was $12.69, according to MarketWatch.
What made GE stock jump?
Progress has been made. Culp has sold assets, reduced debt, and cut costs. As a result, GE's free cash flow from its industrials operations is rising again after years of declines.
What does GE split mean for shareholders?
The key points of the plan are as follows: GE Healthcare will be spun off in early 2023, with GE retaining a 19.9% stake. The GE Power, GE Renewable Energy, and GE Digital units will be put together and spun off in 2024. The remaining GE will be an aviation-focused company.
What is reverse split in GE?
By reverse-splitting its shares , General Electric will have a similar market capitalization, but a lower share count (that is more in line with peers), as the share price per share will be higher. GE will reverse-split its shares at a ratio of 8-1, which means that every 8 shares that investors own right now will be turned into one share ...
Which company has the lowest dividend yield?
General Electric also offers the lowest dividend yield by far, at just 0.3%, whereas peers offer much more attractive yields of 2%-3% mostly. General Electric also is the company with the weakest balance sheet among its peers, and it is the company with the highest leverage ratio among this group: Data by YCharts.
Does reverse stock split change?
As explained above, a reverse stock split does not change anything about a company's fundamentals, earnings, growth, cash flow, balance sheet strength, and so on. From a purely fundamental point of view, the value of the company does not change at all.
Summary
GE's reverse stock split means share price will no longer be a factor for investors deciding between it and other industrials.
Why Did GE Do a Reverse Stock Split
On July 30, 2021, GE announced that it completed the 1-for-8 reverse stock split. The company provided an FAQ dated June 23rd, 2021, explaining why the board felt the reverse split made sense at this time.
Practical Impacts of GE's Reverse Stock Split
Even at a one cent/share per quarter, GE was spending over $350 million annually to supports its dividend. With recent improved cash flows, the dividend payout still clocked in at roughly 10% of GE's operating cash flow.
Is GE Stock a Buy, Sell, or Hold Now?
Since the reverse split, General Electric's stock has primarily traded sideways, a continuation of recent pre-split months. GE's reverse split has little practical value, but the company is still undervalued given the changes implemented since former CEO Jeff Immelt's departure.
Valuation
Below I've made adjustments to my previous sum of the parts valuation primarily accounting for changes in the AerCap and Baker stakes. I also applied ranges to the businesses with less certainty around them, as those segments are most susceptible to management execution failures and successes.
How Did the Reverse Stock Split Affect GE?
Just a few years ago, GE was buried in debt, and bankruptcy rumors were flying given the company's trajectory. At the time, a reverse split could have conserved hundreds of millions of dollars, but despite all the great work John Flannery did during his short tenure as CEO, he wasn't bold enough to cut the quarterly dividend to one cent anyway.
Healthcare Is Driving GE Stock for Now
The old GE was a post-industrial giant. Its GE Capital unit was a “systemically important financial institution” during the Great Recession, alongside banks like JPMorgan Chase (NYSE: JPM ). It was famously lampooned by actor Alec Baldwin on NBC’s 30 Rock (it owned the network) for its complex management style.
Power Remains a Problem
GE Power, which nearly took the whole company down, remains a problem.
