Beatrice Lang
General Electric Company (GE) is one of the oldest and most respected companies in the US, founded in the late 1800s by Thomas Edison, J.P. Morgan, and partners. Despite its pedigree, GE stock has been a poor performer, even before the 2020 stock market crash. GE has a high level of debt, and its share prices have been impacted by C-suite scandals and the pandemic, which affected all its market segments. In 2024, the company split into three, focusing on aerospace, energy, and healthcare. GE's stock has seen some positive movement in 2025, but it remains to be seen if it can recover its former dominance.
| Characteristics | Values |
|---|---|
| High level of debt | $200 million SEC fine |
| Exposure to hard-hit industries | Aviation, healthcare, oil, venture capital |
| Poor performance | Even before the 2020 stock market crash |
| Scandals | C-suite scandals |
| Downgraded by Fitch | From BBB+ to BBB |
| Dividend cuts | Dividends slashed in 2009 and 2010 |
| Job cuts | 12,000 jobs cut in 2017 |
| Poor quarterly performance | Q3 2020 revenues down 12% |
| Mixed quarterly results | Q3 results beat expectations, but some segments missed |
| Volatile stock | 10 moves greater than 5% in the last year |
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What You'll Learn
GE's high level of debt
GE's diverse portfolio of market segments has traditionally been a strength, with revenues in one area compensating for shortfalls in others. However, the pandemic impacted all of GE's market segments, including aviation, healthcare, oil, and venture capital. This has contributed to the company's high level of debt.
GE's share prices have also been affected by scandals in the late 2010s that involved the C-suite. The company's power business, in particular, has faced scrutiny, with a $200 million SEC fine related to a lack of transparency around failures in its power and insurance businesses. The Department of Justice has yet to decide whether to pursue criminal charges.
Despite these challenges, GE has shown some positive signs. In 2025, GE Vernova, which became independent after a three-way split of General Electric, raised its free cash flow (FCF) target, and its shares increased by more than 13% to an all-time high. This suggests that GE may be on a path to recovery and could emerge as a big winner in the 2020s if it successfully addresses its debt issues.
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GE's exposure to hard-hit industries during the pandemic
The COVID-19 pandemic dealt a heavy blow to General Electric (GE), with the company reporting $2.18 billion in quarterly losses. The pandemic's impact was particularly severe on GE's aviation and power units, which experienced significant declines in sales and orders. The aviation unit, usually GE's most profitable segment, saw the steepest fall, with a 39% drop in profit to $1 billion. The grounding of Boeing's 737 MAX planes and the subsequent reduction in global travel further exacerbated the challenges faced by the aviation division.
GE's power division also suffered, with a loss of $129 million. The company was forced to cut 700 workers and 1,300 contractors in this unit, as well as reduce capital spending by 25% for the year. The slowdown in aircraft repairs and maintenance also impacted half of GE's maintenance workforce. The pandemic's effects extended beyond just the aviation and power units, with all of GE's industrial units reporting lower sales and double-digit declines in orders.
The pandemic's impact on GE's business was not limited to financial losses and declining sales. The company was also forced to make difficult decisions regarding its workforce. In addition to the cuts in the power division, GE announced plans to reduce its global aviation workforce by 25% in 2020, starting with a 10% reduction in its 52,000-member aviation team in March. The company also furloughed half of its U.S. aviation component manufacturing and jet engine assembly workers without providing specific numbers.
GE's stock price reflected the challenges faced by the company during the pandemic. In 2020, the company's shares tumbled 5% to $6.54 in midday trading. The decline in stock price was likely influenced by the overall negative impact of the pandemic on GE's business, particularly the significant losses and declining sales in its core aviation and power units. The job cuts and furloughs, affecting thousands of employees, also likely contributed to the market's perception of GE's prospects during this challenging period.
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GE's share prices have been affected by C-suite scandals
General Electric (GE) has been a force to reckon with in its three main business sectors, employing hundreds of thousands of people worldwide. However, GE's stock price has been on a downward trajectory, with a notable decline in 2024, when the company split into three separate entities focusing on aerospace, energy, and healthcare. This decline has been influenced by various factors, including strategic missteps, leadership changes, and C-suite scandals.
One significant factor impacting GE's stock performance has been scandals involving its high-level executives, or C-suite members. In 2019, notable Bernie Madoff whistleblower Harry Markopolos brought shocking allegations of fraud and manipulation against GE's Boston C-suite. Markopolos, a respected forensic accountant, compiled a "damning" report outlining potential wrongdoing within the company. These accusations had a detrimental effect on GE's shares, causing significant turmoil and negative publicity.
The report, allegedly compiled for a hedge fund that remained anonymous, raised serious concerns about the motivations behind the accusations. Former SEC Chair Harvey Pitt questioned Markopolos' approach, suggesting that he should have first brought his findings to the SEC to address the issues privately. Pitt's comments highlighted the suspicious nature of going public without allowing the company to respond to the allegations directly.
While the accusations did not originate from within the company, they still had a substantial impact on GE's reputation and share price. This incident exemplifies how C-suite scandals, whether substantiated or not, can influence investor confidence and, consequently, stock market performance.
It is worth noting that GE has also faced other challenges, such as leadership changes and strategic missteps, which have likely contributed to the overall decline in stock price. The company's former CEO, Jeff Immelt, stepped down earlier than expected in 2017, and in that same year, GE announced plans to cut 12,000 jobs, resulting in a 45% stock drop over the year. These factors, coupled with the C-suite scandals, have collectively impacted GE's stock performance and led to its current position.
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GE's former CEO Jeff Immelt stepped down in 2017
General Electric (GE) has been one of the world's largest companies, with major business lines in aviation, insurance, and media. Jeffrey Robert Immelt was the CEO of GE from 2001 to 2017. He stepped down in 2017, earlier than expected, and handed the reins to John Flannery.
Immelt's leadership style was influenced by his experience as an offensive tackle in football, which taught him about resilience, persistence, preparation, grit, and sacrifice. He brought this mentality to leading GE through some of the most turbulent times in modern business history, including the September 11 attacks and the 2008 financial crisis. During his tenure, Immelt oversaw GE's largest divestments in the company's history, selling almost two-thirds of its subsidiaries and assets, including slower-growth, low-tech, and non-industrial businesses. He doubled the company's investment in R&D and reduced the size of GE Capital, returning the company to its roots in manufacturing.
Immelt's departure was met with mixed reviews. He received recognition and awards throughout his career, including being named one of the World's Best CEOs three times by Barron's and being honoured with an Edison Achievement Award in 2017. However, other outlets criticized his performance. After stepping down, Immelt became a venture partner at New Enterprise Associates, taught at Stanford, and wrote a memoir, "Hot Seat: What I Learned Leading a Great American Company".
GE's stock price has been on a decline since its peak in 2000, and the company has faced challenges in recent years. In 2017, the year Immelt stepped down, GE's stock fell 45%. The company announced it would cut 12,000 jobs, and the stock market reacted negatively to the news. GE has also been impacted by its multi-industry conglomerate structure, which may have contributed to its decline. In 2018, GE ended its more-than-100-year run as a component of the Dow Jones Industrial Average, reflecting its diminished status.
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GE's dividend cuts in 2009 and 2010
General Electric (GE) has had a tumultuous history, with its stock price experiencing significant volatility. One of the key factors contributing to its decline was the company's decision to cut dividends in 2009 and 2010, which had a substantial impact on shareholders' returns.
In 2009, GE made a significant cut to its yearly dividend, reducing it from $1.24 to $0.82 per share. This move represented a substantial decrease from the previous year's dividend of $1.24. While it might not seem like a huge reduction on a per-share basis, the impact was significant due to the vast number of shares outstanding: 8.67 billion. This meant that GE shareholders would receive a staggering $4.1 billion less in dividends each year. This reduction was the largest dividend cut in the history of the S&P 500 by dollar value, outside of the financial crisis.
Unfortunately for shareholders, the dividend cuts didn't stop there. In 2010, dividends fell even further, continuing the downward trend. By 2017, GE's dividend cuts had become even more drastic. In November of that year, the company halved its quarterly dividend from 24 cents to 12 cents per share. This was a significant shift for GE, as the company had been known for offering higher dividend yields than the S&P 500 for about the previous 15 years. Just a month later, in December 2017, GE made another cut, this time reducing the dividend to a mere 1 cent per share.
The impact of these dividend cuts on shareholders was substantial. Not only did they receive significantly reduced payouts, but the value of their investment in GE also declined. Over the past decade, GE shares have slumped by nearly 50%, eroding a large portion of shareholders' wealth.
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Frequently asked questions
GE stock has been underperforming even before the 2020 stock market crash. The company has a high level of debt and its share prices haven't recovered from the scandals in its C-suite in the late 2010s. GE's profitability has also been affected by its presence in hard-hit industries like aviation, healthcare, and oil.
The pandemic negatively impacted GE's performance across all its market segments. GE Power, for instance, saw sales drop each quarter in 2020, including a 12% decline in the third quarter.
Yes. When former CEO Jeff Immelt stepped down in 2017, the stock fell 45% over the course of the year. Additionally, Fitch's downgrade of the company from BBB+ to BBB in mid-April 2021 caused stock prices to plummet.
GE's performance has also been affected by its size and structure. The company peaked in 2000 and has since struggled to match its stock price that year. In 2024, GE split into three independent companies, each focusing on aerospace, energy, and healthcare. This move confirmed the company's diminished status.
