John Flannery, chief executive officer of GE. Christopher Goodney | Bloomberg | Getty Images

General Electric stock fell 7.2 percent this week, one of its worst of the year, and Wall Street's outlook for the fourth quarter isn't getting any rosier. Concern about a recent gas turbine failure in Texas has hung over GE. Its board of directors met Wednesday to discuss how widespread the issue is, according to the Wall Street Journal on Friday, but CEO John Flannery reassured employees that the company's engineers have found a solution to the flaw. Flannery told GE staff to "fight for the company," according to the WSJ, saying media reports overplayed the failure of a turbine blade at the Colorado Bend power plant in Wharton County, Texas. Several Wall Street analysts slashed their price targets following the new roadblock to GE's struggling power business, forecasting the stock to head even lower. GE stock has been cut in half over the last 12 months.

GE total returns over the last 20 years vs. the S&P 500

The painful year as been a boon for investors who have placed big bets against the legacy industrial conglomerate. GE has proven to be this year's second-most profitable short trade, according to financial technology firm S3 Partners. It is the third most shorted stock in the worldwide industrial conglomerate sector, behind Toshiba and 3M. Ihor Dusaniwsky, S3's head of research, estimates profits on the GE short to be $673 million this year, a 36 percent gain. A short sale involves selling borrowed stock, hoping it will fall in price so the stock can be returned later at a profit. UBS cut its price target to $13 from $16 for GE shares, saying GE's power business will likely "require even more aggressive cost reductions, force GE into a vicious cycle." J.P. Morgan brought its price target all the way down to $10 a share, saying the firm now assumes "weaker results at power and some franchise value impact" for GE. Dusaniwsky said the company's stock drop over the past six months has been seen as a "death cross" by technical traders, who are seeing heavy selling by institutional investors. A death cross is a pattern that indicates the potential for a selloff. Meanwhile, the amount of money the shorts are betting against GE has increased 10 percent over the last month, bringing GE's total short interest to $1.36 billion, according to S3.