Last Thursday’s trading session saw shares of General Electric (GE) shares drop below the $9.80 mark, which was their lowest level since April 2009, on the back of concerns surrounding increased tax liability for the company.
GE’s shares dropped by another 4% on Thursday as market analysts voiced their expectation that the near near-term tax liabilities of the company are set to rise significantly.
As per the Tax Cuts and Jobs Act, the company owes as much as $9 billion in taxes whereas the company took into consideration only $3.3 billion in charges while citing various offsetting for the rest. Now ,if some of the ‘offsets’ are disallowed, the company could wind up owing a large tax bill near term.
Considering the present situation of the company, with cash flows weakening and fundamentals of the power segment declining and a rising funding cost of GE Capital as the company was forced out of the commercial paper market – this additional tax burden is taking a heavy toll on the company.
Over the last couple of weeks, GE shares dropped at one point for eight straight days – their longest losing streak in a year.