General Electric (NASDAQ: GE) and Twitter’s stock (NASDAQ: TWTR) have moved up the first week of Q4 2018. Twitter and GE stocks were among the few in the green on Friday, at the end of the first week of Q4 2018, when most stocks and the stock market indices in general were all in the red. AroniSmart sees the two stocks on the path do well, given the tailwinds, more good news about them and the market dynamics. What is driving these stocks.
General Electric (GE): After hitting the rock bottom, GE stock soared on Friday, rising by 16.8% for the week. Since the beginning of the year, GE stock lost 36% from its highest of $19.39 early January to its lowest value of $11.27 in late September. On Friday alone, GE stock shot up 4.1%.General Electric (GE): After hitting the rock bottom, GE stock soared on Friday, rising by 16.8% for the week. Since the beginning of the year, GE stock lost 36% from its highest of $19.39 early January to its lowest value of $11.27 in late September. On Friday alone, GE stock shot up 4.1%.
The question, is: why the momentum in the first week of Q1 2018.
GE: A new CEO and a new focus
First, in late June, GE announced the results of a yearlong strategic review which led to a decision to focus on more promising sectors: power, aviation and renewable energy.
Second, the appointment of the new CEO Lawrence Culp, after GE let John Flannery go effective immediately, just after over one year trying, unsuccessfully, to adress mounting challenges. There are hopes that CEO Lawrence Culp, an outsider, will bring needed changes to reverse GE's downward trend in performance.
Third, the Aviation segment of GE appears on the right track. GE, after recent restructuring will be working in three segments: power, aviation, and renewable energy. Aviation, which is the main profit generator at GE is on track to gain momentum both in the near and long-term. Not only GE Aviation has been growing its sales but also the orders from US and foreign operators have been increasing.GE, like main Aviation operators, has been switching to new jet engine models as the demand from air travelling industry has increased.
One of the potential major roadblocks against GE momentum is a massive impairment charge from costs incurred as a consequence of problems with the Power gas turbine blade and deteriorating conditions in the power segment.
Twitter: Security, Artifical Intelligence and Mid-Term US Elections
Twitter (TWTR) stock was on an exponential momentum at the beginning of the year, as operating income became positive after years of loss and net income continued to improve and became positive. Then negative news about social media, followed by slowing earnings dragged the stock down.
From the beginning of the year to mid-Summer, it had increased by 86%, reaching $46.80 in July 2018, from $22.04 in Jan 2018. It is down 36% over the past three months, back to $28.39. However, there are several factors that may uplift the stock.
First, the changes are being made to address the safety and privacy issues faced by social media. The security issues led to a drop of more than 1 million fake accounts over Summer.
Second, the upcoming mid-term elections in the US are expected to bring in more revenues as politicians, activists and media leverage Twitter to focus electors and the public on events and candidates.
In preparation for the elections, Twitter has been investing heavily in product improvements, artificial intelligence, and nimble sales support.
Meanwhile, The stock may be positively or negatively impacted by the next quarterly earnings report scheduled in late Oct 2018.
