After 110 years the General Electric (GE) stock is not part anymore of the Dow Jones Industrial Average (DJIA) Index, co-owned by S&P Global as from yesterday. The company, a giant in the production of light bulbs and jet engines co-founded by Thomas Edison, was the only original member left in the Dow Jones index when it was created in 1896, and was continuously part of it since 7th November 1907.

The company is facing cash crises due to bad deals, has cut thousands of jobs and halved its stock dividend during 2017. The previous GE’s CEO Jeff Immelt had built up GE’s exposure to manufacturing and servicing coal and gas-fired electricity plants, only to see demand for such plants fall dramatically in recent years as sales of suddenly cost-competitive renewable wind and solar systems increased.

In May 2018 the new CEO warned that GE may not be able to pay its 2019 dividend. Additionally, GE’s credit ratings have been repeatedly downgraded and given a negative outlook. GE is selling off long-held businesses such as the railroad division to repay its debt to focus on the company’s industrial roots in power plants, jet engines, locomotives and other large equipment.

GE was the worst performer of the DJIA last year and lost over 29% during 2018. The Dow Jones index is price-weighted, therefore, the GE price of $13 had little impact on the index (less than 0.5% according to S&P), albeit in terms of market capitalisation GE is larger than other companies which are still part of the index. Although S&P decides on the composition of the index more on an as-needed basis rather than on the basis of quantitative rules, the committee that runs the Dow prefers no more than a 10-to-1 ratio between the high and low stocks in the index. However, the gap between GE and Boeing (the highest price stock of the index) has picked to more than twice that the day before the announcement of the change in the index (27x).

Up to 15 years ago GE was one of the most valuable public company in the world, but recently it was the 6th smallest company of the DJIA by market value and the lowest in terms of stock price.

Not all companies that have lost their place in the Dow have gone to their graves. Bank of America Corp has outperformed the Dow by over 40% since it was removed in 2013. Other big names that left the Dow Jones include General Motors, Chrysler and Citigroup.

The stock has been replaced by the pharmacy chain Walgreens Boots Alliance from yesterday 26th June. According to S&P the entrance of Walgreens Boots Alliance will represent better the US economy, where healthcare companies have gained importance.

Following announcement there was little change in the share price of GE and Walgreens Boots Alliance, which lost 3.4% and gained 4.8% respectively. This is partly due to the fact that the DJ index is not much used by investment funds as a benchmark. Only $29.6 billion worth of assets tracks the Dow or is benchmarked against it, compared to $9.94 trillion that uses the S&P 500 index, according to S&P Dow Jones Indices.