General Electric (NYSE: GE) had the worst week since the financial crisis. The stock fell each consecutive day and ended it with a 14.5% drop. GE is now down nearly 50% from its yearly high. When will the bleeding in the stock price end?
GE needs to clear the uncertainties and reverse its declining businesses, which is a tough feat for both cases. Worries grew, with uncertainty around more problems ahead picking up after GE took a massive $6.2-billion tax charge for Q4.
The poor-performing legacy reinsurance business will also cost GE $15 billion in reserves over the next seven years. GE will not no longer get any dividends from GE Capital as a result of the charges. This could lead to GE cutting its own dividend to shareholders.
GE already explained that Capital stopped its $3-billion dividend and that the final tally on the charges would be revealed in the Q4 report. GE reports quarterly results on January 24.
GE Capital may have a fraud problem on its hands, as shown by the size of the reserve.
At this rate, GE stock may continue falling. Talk that the company would break itself up also heightened fears. But GE’s mismanaged is fixable. If the newly-appointed CEO restructures the business and cuts out costs, then GE stock could bottom and the share price drop will end.
