General Electric (GE), a brand that is identical with light bulbs and aircraft jet engines, has been entrenched in Dow Jones index on New York Stock Exchange since the existence of index 110 years ago. But now, GE has to out of the Dow Jones Industrial Average's elite stock list.
Quoted from Reuters, GE's position in the list of 30 DJIA shares, will be replaced by pharmaceutical and healthcare company Walgreens Boots Alliance. This change will be effective from Tuesday (26/6) future.
Out of Dow is a bad note for GE. The Boston, Massachusetts-based company is indeed struggling with a serious financial crisis, as a result of worsening corporate performance. GE has replaced its CEO, slashed thousands of workers and cut stock dividends by half.
Last year, GE was the worst-performing stock on the Dow, losing almost half of its value. GE shares are down 25% this year.
"We are focused on implementing the plans we are making to improve GE's performance," a GE spokesman said in a statement. "Today's announcement does not change our commitment or focus in creating a stronger and simpler GE."
To pay the debt burden, GE sold some of its long-term business. Last month, GE agreed to sell a railroad division that has been managed for a century. GE is also looking for buyers for light bulbs who are struggling to restructure.
The continuing decline in GE stocks ultimately led GE to leave Dow Jones index. That's because Dow is based on price-weighted, so the position of GE shares at USD 13 is currently less than 0.5% of the overall weight of DJIA index.
Chairman of the S & P Index Committee, David Blitzer noted, industrial companies like GE are no longer prominent in the American economy. Banks, healthcare companies, technology, and consumers play a bigger role today.
As a result of this decision, GE shares fell 2% in after-hours trading on Tuesday (19/6). For Dow, this is the first reform of the prestigious index since 2015. Last time, Apple (AAPL) replaced AT & T in the index list.
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