Analyst Note
| Joshua Aguilar |After attending GE’s virtual outlook meeting and reviewing its announced GECAS transaction, we maintain our fair value estimate of $14.10. The market sold off GE’s stock by over 5% on the trading day, which we speculate is due to the announcement that its board recommended a 1-for-8 reverse stock split to decrease the number of shares outstanding (to take place sometime prior to the annual meeting in early May of 2021). To be clear, a reverse stock split bears absolutely no bearing on the intrinsic value of a firm. We surmise that part of the motivation is removing some of the perception of owning what’s been a sub-$10 stock at various points in time as this can form a bar to institutional ownership. We also believe a higher stock price could encourage longer-term ownership.