Reverse Stock Split Has GE Trading Above $100 — What This Means for Shareholders
Written by
Yaël Bizouati-Kennedy
Edited by
Cooper Bernier
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
GE effected a 1-for-8 reverse stock split on July 30, 2021. The split adjusted shares began trading on August 2 above $100, the company announced.
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.
See: Bitcoin Crashes After Weekend Price SurgeFind: Every Stock That Warren Buffett Owns, Ranked
A company may declare a reverse stock split to increase the trading price of its shares — for example, when it believes the trading price is too low to attract investors to purchase shares, or in an attempt to regain compliance with minimum bid price requirements of an exchange on which its shares trade, according to the Securities and Exchange Commission.
Reverse stock splits don’t change anything about the company’s financial condition, except to effectively increase the earnings per share as the number of shares outstanding is reduced, MarketWatch explains.
Learn: Sweetgreen Files for IPO: Can Plant-Based Eating Power This Stock to Success?
“As a result of the reverse stock split, every eight shares of GE common stock issued and outstanding or held as treasury shares were automatically combined into one share of GE common stock,” the company said in a statement. “This reduced the number of outstanding shares of GE common stock from approximately 8.8 billion to approximately 1.1 billion. Outstanding GE equity-based awards and shares or share units under GE benefit plans were proportionately adjusted.”
GE added that no fractional shares were issued in connection with the reverse stock split, and that shareholders that would hold a fractional share as a result of the reverse stock split will receive a cash payment in lieu of such fractional shares.
Colin Scarola, vice president of equity research at CFRA Research, says in a research note sent to GOBankingRates that CFRA maintains its Hold opinion on GE following the reverse split.
See: Big Bank Stocks Are Overperforming — and They’re ‘Dirt Cheap’Find: 9 Fast-Food Stocks To Invest In Now
“We adjust our 12-month target price to $104 from $13, accounting for our revised earnings estimates and a 1-for-8 reverse stock split,” Scarola says in the note. “We remain at Hold on GE shares, with positive long-term outlooks for its high-barrier aviation and healthcare segments. But poor outlooks for its energy segments, where foreign competition has the upper hand, in our view,” he adds.
More From GOBankingRates
- What Money Topics Do You Want Covered: Ask the Financially Savvy Female
- 5 Things Most Americans Don’t Know About Social Security
- 20 Home Renovations That Will Hurt Your Home’s Value
- What Income Level Is Considered Middle Class in Your State?
Last updated: August 3, 2021
