General Electric could be under pressure longer. Should you hold?

By:
on Mar 8, 2022
  • GE expected high costs to exert pressure on profits in the first half of the year.
  • The war in Ukraine may increase the pressure on GE’s revenues and costs.
  • The share’s performance will depend on economic performance.

General Electric Company (NYSE:GE) announced towards the end of February that it faced significant challenges from the high-interest rates. The company was also not immune to global supply chain challenges and high labor costs.

GE notes that the costs would pressure its profitability, at least in the first half of the year. In a bid to calm the markets, GE mentioned that it expects to close the year with strong growth in revenues.

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The announcement came just as the market was starting to absorb news of the conflict in Ukraine. Since then, the company has not provided any guidance on how it expects the crisis to affect both the top line and the bottom line.

Considering earlier guidance that indicated high pressure from rising costs, the market considers that GE may not perform to expectations. The revenues at the end of the year may be much lower than the company anticipates.

GE jitters keeping the price at $100 (+/-$10)

Source –  TradingView

GE stock jitters to the uncertainties in the market and the economy. It closed the week at $87.32. the price is below the 10-day and 20-day moving averages, both of which are below the 50-day.

The overpowering pressure is for the stock to trend downwards. Nonetheless, the stock remains defiant. The price oscillates around $100 with a $10 deviation above and below the centerline.

MACD analysis shows that the stock has slight bearish momentum characterized by low volatility. The same image is projected by the RSI of 39.71, which is four points lower than the SMA at 44.78. Based on the indicators, it becomes clear that the key determinant of how the stock performs will be the economy. Effectively, it is recommended to hold GE.

Summary

GE may face high pressure on both the revenues and costs, leading to lower profitability. The performance will depend significantly on the health of the economy. We recommend that you should hold GE.

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