GE filed a Form 4 this week saying they sold 9,836,521 shares of PVTL on 11/6 for 17.6 or around $173 million. They still have 5,695,554 shares left, so we may see additional selling which would pressure shares further. This should not come as a surprise given that GE has really struggled lately and had to massively cut their dividend. They are also a customer and loved PVTL so much, they invested enough into the company to own over 10% of it. Given their financial trouble, we could see GE significantly reduce their spend on PVTL. See below from the recent 10Q on their PVTL related purchasing:
Revenue recognized from sales of subscriptions and services to General Electric Company was $2.9 million and $2.6 million for the three months ended August 3, 2018 and August 4, 2017, respectively, and was $5.9 million and $5.6 million for the six months ended August 3, 2018 and August 4, 2017, respectively.
A big spend reduction is exactly what happened to Ford when they drastically reduced their spend compared to prior year as they have also gone through financial troubles. Here is Ford’s PVTL spend from the recent 10Q:
Revenue recognized from sales of subscriptions and services to Ford Motor Company was $3.3 million and $12.2 million for the three months ended August 3, 2018 and August 4, 2017, respectively, and was $6.9 million and $23.0 million for the six months ended August 3, 2018 and August 4, 2017, respectively.
Luckily GE’s spend is not as significant as Ford, but it will still likely be a drag on their revenue growth. It’s unfortunate that 2 of the biggest customers are having such financial trouble in another wise healthy economy. I think there is also risk that Ford may sell shares, so that is a potential risk now that the lockup period is over. These are shorter term issues and present near term headwinds.