General Electric Company (NYSE:GE) sparks flying short

Posted by Lynn Eisler July 29, 2013 0 Comment 1719 views

Last week, General Electric Company (NYSE:GE) saw investors rallying for it. It faced considerable gains that eventually eased-out only by the end of the 20 July trading week. Analysts everywhere noted that all this enthusiasm around the stock was due to the boost in orders as well as from implication of the industrial sector as a whole. However, investors had followed the company right upto its earnings report and managed to short the stock as well.

Some prominent analysts had noted that that General Electric Company had climbed to24th place amongst the stocks that had short interest. Of all the different metrics that had been presented the notable one was the amount of time that had been provides to short-interest investors to cover.

Misplaced understanding

There had been news that the company’s revenues were on the decline and would have a negative impact on GE’s earnings report which was to be announced very soon. It just seemed that investors had been buying into that news. Short sellers may have predicted the way GE was going to swing. After the brief boost last week, GE prices have plateaued and overall, they have been trending into negative territory.

It is a fact that at the end of the day, almost everyone looks at profits margins and revenues tend to move into the shadows in the broader perspective. To a certain degree, GE revenues are on the decline as the company is chopping its finance division. In addition, several hundred employees are slated to be laid-off in France.

Analyst backing

Analysts are smiling down on GE’s commitment to downsizing. It is looked upon as the basis to its long-term sustainability and health. It is not clear yet whether the downsizing GE Capital and lower revenue will actually discourage investors into shorting the company’s stock. But many analysts are still backing GE and most have rated it as a “buy”. From a long-term point of view, a trimmer finance department could mean profits for investors.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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