After just three weeks, 2018 looks to be another rough ride for General Electric Co. (NYSE: GE). In the first week of the year, GE was the best-performing stock among the 30 stocks that comprise the Dow Jones Industrial Average (DJIA). In the week just passed, it has returned to its ranking as the worst performer, a place it held for more than half of 2017.
GE’s shares lost 14.5% last week and they are down 6.8% since the beginning of the year. The second-worst performer for 2018 among the Dow 30 is Intel Corp. (NASDAQ: INTC), down about 2.9%, followed by Verizon Communications Inc. (NYSE: VZ), down just over 1.9%, and American Express Co. (NYSE: AXP), down about 1.3%. There are just five Dow stocks trading down for the year to date.
The Dow posted an all-time high of 26,153.42 on Thursday and closed the week at 26,071.72, up about 54 points (about 0.2%) for the day. The index has gained about 5% in the first three weeks of the year.
GE’s decline last week was all down to an after-tax charge of $6.2 billion related to the run-off of GE Capital’s reinsurance portfolio. At the new corporate tax rate of 21%, the after-tax impact of the charge totals $7.5 billion. GE Capital also will make statutory reserve contributions of about $15 billion over the next seven years.
CEO John Flannery was clearly frustrated:
At a time when we are moving forward as a company, a charge of this magnitude from a legacy insurance portfolio in run-off for more than a decade is deeply disappointing.
Even a $900 million order from the state-run railroad of Kazakhstan did little to stop the slide.
GE shares dropped to a new 52-week low of $16.02 on Friday, before recovering slightly to close the week at $16.29. Shares lost $2.50 for the week. The stock’s 52-week high is $30.59, and the 12-month consensus price target is $21.71. The low target is $15 and the high target is $36.