General Electric announced that they are going to replace CEO John Flannery, after just over a year in the role. This announcement was greeted very positively by investors as the stock rose by 10%. Having such a short run is very uncharacteristic for a GE CEO, as before Flannery the company only had four CEOs in the previous 54 years.
Although the company said that it will miss previously provided guidance for free cash flow and eps in 2018, there is very little wonder as to why investors reacted so positively.
Since Flannery took over as CEO a year ago, the stock plummeted 55% whilst throughout the same period, the DOW Jones index rose by 21%.(see image below).
We already discussed in another article the various misfortunes the stock suffered last year and why it might be very tempting to buy the stock now.
The newly appointed CEO, H. Lawrence Culp Jr said that he will be working with extreme commitment to strengthen the balance sheet, which ultimately is what the shareholders want.