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(CNN Business) —  

Here’s a scary thought: General Electric’s cratering stock may not reflect the true depths of disaster at the storied company.

GE’s stock will plunge another 33% to $6 by the end of 2019 due to mounting debt problems, JPMorgan Chase analyst C. Stephen Tusa, Jr. warned in a brutal research report published on Friday.

The ominous call from Tusa, the biggest GE (GE) bear on Wall Street, promptly sent the stock dropping as much as 10%. GE bounced off the lows after the company said it has a “sound liquidity position.”

Tusa presciently went negative on the stock in May 2016, when the stock was trading at $30. It has since lost nearly three-quarters of its value.

GE is down 52% this year alone, making it the third-worst stock in the S&P 500. GE was kicked out of the Dow over the summer, ending a 110-year streak.

Even though a $6 share price was “hard to image” just months ago, it may not even be the worst case scenario, Tusa wrote. “It can get worse.”

Citing GE’s bleak third-quarter results, Tusa slashed his 2019 and 2020 earnings targets to well below Wall Street’s consensus view. He pointed to continued trouble at GE Power, the division that makes turbines for power plants. GE has been caught flat-footed by the shift away from coal and natural gas in favor of renewable energy.

Investors are growing more worried about GE’s debt-riddled balance sheet, created by years of poorly-timed acquisitions and bad decisions.

The problem is GE’s profit and cash flow are shrinking much faster than its debt. GE and GE Capital listed total borrowings of $115 billion at the end of the third quarter, compared with $126 billion at the end of 2017.

GE’s leverage problems forced the company last month to slash its dividend to a penny and unexpectedly oust former CEO John Flannery. GE, once the model conglomerate, is also racing to sell off long-held businesses, including the iconic light bulb unit and the profitable health care division.

GE shares initially rallied after Larry Culp was named the new CEO but they have since resumed their long slump.
PHOTO: Michael Nagle/Bloomberg/Getty Images
GE shares initially rallied after Larry Culp was named the new CEO but they have since resumed their long slump.

GE’s credit rating has also been downgraded to the point that it’s been forced to retreat from the $1.1 trillion commercial debt market in favor of more expensive bank financing.

Tusa warned that the leverage situation at GE Capital, the company’s bleeding banking arm, is approaching a “tipping point.” He estimated that GE Capital has up to $45 billion of “stranded” debt and liabilities. That includes the company’s long-term insurance portfolio and legal troubles at WMC, the defunct subprime mortgage lender.

The “clock is ticking” on GE Capital, Tusa wrote.

In response to the JPMorgan report, GE said in a statement that it is a “fundamentally strong company with a sound liquidity position.”

GE has $40 billion of credit lines with banks that it can use to fund the business. GE recently said it has tapped a “portion” of these revolvers. GE has also promised to rapidly shrink GE Capital, continuing a years-long process that began after the financial crisis.

“We are taking aggressive action to strengthen our balance sheet through accelerated deleveraging and position our businesses for success,” the company said.

GE’s dividend cut will save the company $4 billion a year. And the company plans to raise $20 billion by selling off various businesses, GE Healthcare and the majority stake in oil and gas giant Baker Hughes (BHGE).