GE is the worst company of the year (again), according to Yahoo Finance readers
For the second year in a row, Yahoo Finance readers have chosen General Electric (GE) as the worst company of the year.
One look at its stock chart explains why: shares are down almost 60% for the year.
Out of all companies in the S&P 500 index, only beauty company Coty (COTY) has performed worse, down 64% year to date.
The results came with a fairly stunning margin. Nearly a third (32%) of the 2,200 readers who completed our survey chose the former titan for this distinction, beating the next most chosen business — Facebook — by around 23 percentage points.
In 2017, GE earned readers’ ire after sliding nearly 42%. Losing that much value earned GE 26% of the “worst” vote — an enormous amount considering any company was eligible — even ahead of Equifax, which merely lost everyone’s data. (Equifax shares ended 2017 flat.)
GE got rid of a lot in 2017: Jeff Immelt, some problematic aspects of its businesses, and, unfortunately, a whopping $127 billion in value (market cap). At the time, we wondered whether this would result in a better year in 2018.
It did not. In 2018, GE lost approximately another $86 billion in market cap. The company that had brought forth the modern world through electricity had another tough one, and went through its second CEO in two years, ousting John Flannery after 14 months.
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GE also lost its spot in the Dow in June after 122 years on the index, the longest in history.
Reached for comment, a GE spokesperson pointed to previous public comments by CEO Larry Culp, who took over in October.
On the third-quarter earnings call, Culp said: “We are making GE a stronger company operationally and financially… We know what to do. Now is the time to execute.”
And from the third-quarter earnings release: “We are on the right path to create a more focused portfolio and strengthen our balance sheet. My priorities in my first 100 days are positioning our businesses to win, starting with Power, and accelerating deleveraging. We are moving with speed to improve our financial position.”
The fact that GE has topped this list for a second time shows how widely held its stock is. It’s a top five most-searched ticker on Yahoo Finance. It used to be a blue-chip company; it was until June 2018 included in the Dow Jones Industrial Average; and there are 8.7 billion shares outstanding. (To put that into perspective, Apple (AAPL) has 4.8 billion.) People care about GE.
Here’s a sampling of our readers’ gripes:
“Leadership turmoil, bad bets on eco-industry, poor execution on core business,”
“Management is terrible, too focused on short-term gains, not investing in R&D and creating cool new products.”
“Lost its mojo.”
“Seems to resemble a rudderless boat.”
“They are an unmitigated disaster, with negative surprises for investors almost every month.”
“Declining price; delisted from ^DJIA.”
“Cut dividend and headed to zero.”
“I LOST BIG BUCKS.”
It goes on.
But despite the enormous number of people who are furious with GE, 59% of them said the company could in fact turn it around.
GE has been banged up over the years with poor plays during the financial crisis, heavy investment in oil just before it tanked, and an aimless, sprawling business. An original member of the Dow Jones Industrial Average, the company exists as an enormous conglomerate in an era where conglomerates don’t have the benefits they once did — or really exist any more in the same way.
In its annual report published this year, GE listed its many operating segments: power, renewable energy, oil & gas, aviation, health care, transportation, lighting, and capital.
In some sectors, analysts from Morningstar are optimistic that it will continue to have an advantage, like in aviation and health care, areas in which GE has a ton of market share. But at the same time, many of the industrial sectors GE operates in have been hit hard and the financial services business had problems during the financial crisis. This has led many to call for a breakup or at least some spin-offs, so the unprofitable parts can be excised and not take resources.
Almost on cue, on December 19th, the day of publishing, Bloomberg reported that GE’s second-most profitable unit, its heath care business, may be spun off next year.
With the latest CEO, there is some new blood, but analysts think the current strategy will remain for the time being. As Morningstar puts it, “a successful multi-year turnaround will not be easy.” UBS pegs a turnaround at around “a year or two” when it comes to the power business.
Still, the stock has an average price target a few bucks above its current $7, at $11.27, according to Bloomberg data, which counts 9 buys, 13 holds, and 2 sell ratings from analysts.
Honorable mention: Facebook
A few other companies — while not as disliked as much as GE — were clearly unpopular with readers that bear mention.
Facebook (FB), with 9% of the vote, took a lot of heat from readers. Shares are down around 22% for the year. Over 60% of survey respondents who picked it said the company, which had a tough year full of privacy scandals, could not be redeemed, citing “atrocious management,” “fake news,” “lack of corporate ethics,” and “Dude, where’s my privacy?”
In a statement, Facebook spokesperson Anthony Harrison said, "We are committed to learning from the lessons of the past year and earning back people’s trust. We're working together as a company to fix these issues. Everyone at Facebook has a stake in our future and we are heads down shipping great products and protecting the people who use them.”
Honorable mention: Sears
Honorable mention: Tesla
Tesla (TSLA), which actually is up on the year, made the list as well, with around 3% of the vote, good enough for fourth place. The company has experienced quite the year, with production difficulties for its Model 3 and loose-cannon behavior from its CEO Elon Musk, who put himself in a regulatory imbroglio by tweeting “funding secured” when it was in fact very much not secured. The snafu cost the company and Musk $20 million each. Tesla did not respond for comment.
Honorable mention: Helios & Matheson Analytics (MoviePass)
Helios & Matheson (HMNY) is not particularly well-known. But in August 2017, the data analytics company bought a majority stake in MoviePass, which had been steadily gathering steam for providing its customers with all-you-can-see movies for $15 a month. The stake was eventually upped to 92%.
When Helios & Matheson gained control, MoviePass’s price lowered to $9.95 a month and changed to a one-film-per-day plan.
Valuation skyrocketed for Helios, and the stock jumped from around $680 to over $4,000, before settling around $2,000 to begin the 2018.
In February it began to bleed. By August, a share of HMNY was under a dime. MoviePass’s business model of buying movies for all its subscribers for one price, and charging them less than that price to watch them, was not working, even at scale. As of the third-quarter financial statement, the company had lost over $219 million, with revenues of $204 million in 2018. Cash on hand had shriveled up from $25 million to just under $5 million.
The company did not respond for a request for comment.