What is a reverse stock split and why is GE doing it?

A reverse stock split is a corporate action where a company consolidates its existing shares of stock into fewer, proportionally more valuable shares. GE is implementing a 1-for-8 reverse split. Companies typically do this to increase their stock price per share, which can make the stock more appealing to a broader range of investors, including institutional ones, and help meet minimum price requirements for stock exchange listings.

How will the reverse stock split affect my existing GE shares?

For every eight shares of GE common stock you currently hold, you will receive one share after the reverse stock split. For example, if you owned 800 shares, you would own 100 shares after the split. The total value of your investment should remain theoretically the same immediately after the split, as the share price is expected to adjust proportionally upwards.

When will the reverse stock split take effect?

The reverse stock split is expected to be effective after the market closes on July 30, 2021. Following this, GE's common stock will begin trading on a split-adjusted basis on August 2, 2021.

Will the reverse stock split change the overall value of my GE investment?

The reverse stock split itself does not change the total market capitalization of the company or the overall value of your investment at the moment of the split. It simply reduces the number of outstanding shares and increases the price per share proportionally. However, the stock's future performance will depend on the company's operational results and market conditions.

GE 8-K SEC Disclosure — Jun 21, 2021

Summary

General Electric Company (GE) has officially announced its decision to proceed with a previously approved 1-for-8 reverse stock split. This corporate action, alongside a proportionate reduction in authorized common stock and a par value reduction, is designed to adjust the company's share structure. The reverse stock split is slated to become effective after the market close on July 30, 2021, with the common stock expected to trade on a split-adjusted basis starting August 2, 2021. This move is typically undertaken by companies to increase their stock price, potentially making it more attractive to institutional investors and meeting exchange listing requirements. Investors should note that while the number of shares decreases, the total market capitalization theoretically remains the same immediately after the split. The company has provided a press release dated June 18, 2021, detailing this announcement, which is incorporated as an exhibit to this filing.

Key Highlights

1GE will implement a 1-for-8 reverse stock split, approved by shareholders on May 4, 2021.
2The reverse stock split will also include a reduction in authorized common stock.
3The par value per share will be reduced from $0.06 to $0.01.
4The effective date for the reverse stock split is after the close of trading on July 30, 2021.
5GE common stock is expected to trade on a split-adjusted basis beginning August 2, 2021.
6This action aims to increase the per-share trading price of GE's common stock.
7The company has filed an amendment to its certificate of incorporation to effectuate the split.

GENERAL ELECTRIC CO 8-K Report, Corporate Update (Jun 21, 2021)

Summary

Key Highlights

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