General Electric Is Crashing to 3-Decade Low & New Investors Love It

May 15, 2020 4:30 PM UTC
General Electric is down 50% year-to-date, but it has found unlikely buyers amid the carnage.
  • GE is having a bad year, but new investors are flocking to the stock in droves.
  • The company is facing multiple headwinds due to the coronavirus pandemic.
  • There’s chatter that the 128-year-old conglomerate is on the brink of bankruptcy.

General Electric (NYSE:GE) is having an unforgettable 2020. The stock is down nearly 50% year-to-date after trading at $5.48 per share Thursday, its lowest level in almost 30 years. But it’s not all bad news for the global industrial giant as young investors are bottom picking the stock.

GE Becomes Second Most Popular Stock on Robinhood

General Electric may be a 128-year-old company, but it’s the young people who are seeing the value in its shares. Robinhood, a platform whose 6 million customers are mostly millennials, reports that its users flocking into GE.

Shares of the multinational conglomerate are owned by over 740,000 Robinhood users, good enough for a runner-up finish in the popularity race. GE is just behind Ford (NYSE:F), a stock that is also having a nightmarish 2020.

The ten most popular stocks on Robinhood. | Source: Robinhood

A look at the ten most popular stocks on Robinhood suggests investors favor companies that have taken a nosedive this year. Except for Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL), all stocks in the top ten are in a strong downtrend.

New investors may be fond of GE, but there’s no certainty that the love will be rewarded, considering that the stock is facing headwinds in this time of crisis.

GE Is Succumbing to the Economic Fallout of COVID-19

Rumors are swirling in the investment world that it’s only a matter of time before General Electric files for bankruptcy. The reasons are quite obvious.

In April, the company furloughed half of its engine manufacturing staff. With air travel nearly grinding to a halt, demand for GE’s jet engines has plunged. GE’s Capital and Power segments are suffering due to the low-interest-rate environment and economic slowdown.

Former Goldman Sachs analyst tracking heavy put calls on GE. | Source: Twitter

Trader activity is helping fuel bankruptcy chatter. One options trader bet $1.5 million that GE would plunge another 20%. Aset analytics platform Macroaxis says that GE has a 51% chance of facing financial distress in the next two years.

GE may be popular to young investors as they might see the stock as a strong buy on dip candidate. But there’s no telling how deep the dip might go. It’s possible that the company may not survive this crisis.

Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. The author holds no investment position in the above mentioned companies.

Sam Bourgi edited this article for CCN.com. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

Last modified: May 15, 2020 4:31 PM UTC

@kirilnikk123

Kiril is a CFA Charterholder and financial professional with 6+ years of experience in financial writing, analysis and product ownership. He has a bachelor's degree with a specialty in finance and lives in Canada. Kiril’s current focus is on finance and cryptocurrencies. He also has his personal website, Investor Academy, where he teaches people about the basics of investing. He owns Bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading. Get in touch with Kiril: Muck Rack, Email, Follow on Twitter