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Why General Electric Company's Shares Jumped as Much as 13.3% Today

By Travis Hoium - Nov 13, 2018 at 5:47PM

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Will another asset sale help it in the long term?

What happened 

Shares of General Electric Company (GE -3.32%) jumped as much as 13.3% in trading Tuesday after the company announced the potential sale of its stake in oil-field services company Baker Hughes (BKR -1.46%). At the close of trading, shares were up 7.8% on the day. 

So what

GE will sell up to 101.2 million shares of Baker Hughes, 65 million of which will be acquired by Baker Hughes itself. The deal could net GE $4 billion based on Baker Hughes' current valuation. Some U.K. pension liabilities will also be transferred to Baker Hughes, and a service fee paid to GE will be reduced. 

Oil wells operating at sunset.

Image source: Getty Images.

This is part of a bigger strategy by GE to sell assets and simplify its balance sheet and overall business. Oddly enough, this undoes a deal that was just finalized last year, showing how quickly GE has had to transition its energy business. 

Now what

For context, GE's stock is still down 30.2% in the past month and 58% over the past year, so today's pop was a small move in the context of GE's overall performance. 

GE Chart

GE data by YCharts

GE has a long way to go to be a strong company and stock, and this may help it along that path. But investors should be a little wary given the amount of asset sales the company has made in the past 10 years, as the stock has continued to drop. 

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Stocks Mentioned

General Electric Company Stock Quote
General Electric Company
$63.69 (-3.32%) $-2.19
Baker Hughes, a GE company Stock Quote
Baker Hughes, a GE company
$29.63 (-1.46%) $0.44

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