The stock has been a sinking rock for more than a year now. When the company reported earnings back in October 2017, it was clear that there were issues. A halving of the dividend a month later and Warren Buffett bailing on GE a few months later were further signs of deterioration.
Also, that pesky analyst Stephen Tusa of JPMorgan hasn't stopped torturing bulls, with negative note after negative note.
He continually lowered his price target, only to see GE sink lower and lower. He hasn't stopped yet, either, cutting his price target to $6 after General Electric's latest earnings report. Management painted a not-so-great picture and all but eliminated the quarterly dividend, cutting it by more than 90% from 12 cents a share to 1 cent a share. The company also missed on earnings and revenue expectations.
All of this has buried GE stock, causing it to fall from $11 before earnings on Oct. 30 to new lows of $7.72 just a few days ago. Is the beatdown too severe or could more downside be in store for GE stock?
Trading GE Stock Price
The problem with General Electric is the uncertainty. The pain won't stop until investors feel that the business is bottoming. That's clearly not the feeling right now. GE's recent announcement saying that it would accelerate its stake reduction in Baker Hughes (BHGE - Get Report) in order to raise capital by the end of the year isn't improving that sentiment.
The stock initially rallied on the news, running to $9.05 in Tuesday's session. That filled the gap -- to the penny, actually -- from last week. Now shares are teetering between the $8 and $9 level as uncertainty creeps back in. Which one will give way?
As a trader, we don't know which level will ultimately give way. Given the put volume on the name and with GE's 2035 bonds trading near 80 cents on the dollar, it doesn't suggest that traders are optimistic. For reference, short-sellers continually pointed out the bloated balance sheet of Tesla (TSLA - Get Report) and often referenced its 2025 bonds, which traded near 83 cents on the dollar during its toughest stretch.
On the charts, the situation doesn't look good. Should $8 give way, the lows of $7.72 are back on the table. Below that and GE stock will remain lost in no man's land. Perhaps Tusa's $6 price target will be hit.
On the upside, look to see if GE can break above $9. If it can, a test of the 21-day moving average and the $10 level could be in the cards. From there, we'll have to reassess. But the important thing will be for $9 to hold as support, if and when it's able to get above it.
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