PreMarket Prep Stock Of The Day: General Electric

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

Just as General Electric GE was showing some promise on the technical end and somewhat on the fundamental end, the company derailed the rally.

Doing Just Fine In 2021: After ending 2020 at $10.80, GE bottomed in January at $10.40 and ended the month at $10.68. The rally began in earnest in February, climbing to $12.54 and the momentum in March had taken the issue to $14.42 in Tuesday’s session.

That marked the highest level for the issue since it peaked in May 2018 at $14.99. It retreated from that high to end the day at $14.00 for the first time since May 25, 2018.

The Old News: Before the open, the company made a few announcements, one which had been reported on Monday but in more detail. That being the company was nearing a $30 billion deal to offload its jet-leasing unit To AerCap.

The deal will make the company a more focused, simpler, and stronger industrial company. The plan will reduce debt by $30 billion, bringing its debt reduction plan since the end of 2018 to more than $70 billion.

The Bad And Really Bad News: As a result of the deal, the company lowered 2021 adjusted EPS to $0.15-$0.25 versus a $0.26 estimate.

However, the Street is not taking a liking by the Board's recommendation to initiate a 1-for-8 reverse stock split.

Dennis Dick cautioned on Wednesday’s show that for the most part, investors do not like reverse stock splits: "Stocks usually go down on reverse stock splits because investors do not like shares being taken away from you."

The full discussion on the issue can be found here:

Price Action: After an initial surge in premarket trading just about Tuesday’s high ($14.42), reaching $14.52, the issue sharply reversed course. Following a lower open, the issue rallied only $0.08 to $13.74 and resumed its mover lower.

As of 11:30 a.m. ET, GE flirted with the series of lows just above and under $13, falling to $12.92. Since making that low, it has rebounded back into the lower $13 handle.

Photo credit: Momoneymoproblemz, via Wikimedia Commons