On Tuesday, General Electric (GE) is set to complete the spinoff of its power generation-related businesses, a move that marks both the conclusion of one narrative and the commencement of another. This spinoff entity, named GE Vernova, will begin trading under the ticker symbol “GEV,” while General Electric itself will undergo a transformation into GE Aerospace, retaining the familiar “GE” ticker symbol. This development signifies a significant shift in the corporate landscape, marking the first time since the late nineteenth century that the marketplace will not feature a standalone entity known simply as “General Electric.” Legally, however, GE Aerospace will retain the General Electric name, ensuring its continued existence in an official capacity.
This restructuring leaves investors and the public with three distinct entities bearing the GE script logo: GE Aerospace, GE Vernova, and GE HealthCare Technologies, which was spun off at the beginning of 2023. Gone is the era of the monolithic “General Electric.”
As the spinoff takes effect, the value of GE Vernova shares that shareholders receive will be subtracted from the value of GE Aerospace. While some trading volatility may ensue initially, the situation is expected to stabilize within a day or two, leaving investors with holdings of both “GEV” and “GE” shares in their brokerage accounts. Currently, GE Vernova shares are trading on a “when-issued” basis, providing investors with insights into valuation and market expectations before regular trading commences.
Ahead of the spinoff, GE Vernova shares saw a 2.6% increase in midday trading on Monday, reaching $140.49, while General Electric stock experienced a modest decline of 0.6% to $174.37. Shareholders of GE will receive one share of Vernova for every four shares of GE held, implying a current value of Vernova stock in GE of approximately $35 per share.
Moving forward, GE Aerospace will continue its role as a leading provider of jet engines, powering a significant portion of global commercial flights. With headquarters in Cincinnati, the company generates annual sales of around $32 billion and employs approximately 52,000 individuals. Projections indicate that GE Aerospace is expected to achieve 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA) of roughly $8.4 billion, implying a multiple of about 19 times the 2025 figure. This valuation suggests investor anticipation of above-market growth rates in sales and earnings over the coming years.
In contrast, GE Vernova aims to spearhead the global transition to renewable power, offering systems and products that contribute to approximately 30% of global power generation. Headquartered outside of Boston, the company generates approximately $33 billion in annual sales and employs about 80,000 people. Projections indicate a 2025 EBITDA of approximately $2.5 billion for GE Vernova, translating to a multiple of about 13 times.
Analyst coverage of GE Vernova shares is expected to commence in the coming weeks, with the number of analysts covering the stock likely increasing over time, as seen with GE HealthCare Technologies following its spinoff. The sentiment among analysts regarding GE Vernova and GE Aerospace stocks will depend on various factors, including post-spinoff trading performance and broader market conditions.