Earnings Challenge E1｜Unveiling the answers

I would split investment $ across the 3 companies for long term holdings. Both Boeing and Airbus will likely lose revenue to the private sector airlines as Covid has impacted travel, but both also provide to defense industry which will likely continue to drive revenue. GM will see growth as EVs become more commonplace.

Boeing(BA.US) is the only loss making company in the list above. Recently, Boeing(BA.US) not only have to overcome its quality issue , it also facing supply chain problem. Airbus SE as a competitor of Boeing(BA.US) certainly benefit from its failure.

Current high price of oil is not good for the airlines industry. Due to current macro environment, higher interest rate may have higher probability lead to economic recession. People and companies will tend to spend less on discretionary purchase. And this is not good for the airlines industry too.

It may not a right time to purchase airline stock at this moment as there is a lot of uncertainty ahead.

To understand better the reasons for market cap deviation, we should direct our attention straight to the individual elements that constitute the market cap value (Total share number & Price of each share).

Given that Boeing and Airbus are major players in the same industry, they are in direct competition with each other for market share. However, each has their own unique selling points (USP) and attend to different clients with different requirements. This could be a possible reason for Airbus, despite being the world's largest airline manufacturer, to fall behind Boeing in terms of market cap value.

GM has a sizable market cap of $56.09B, although smaller than that of Airbus and Boeing. This could be due to the number of competitors in the same space compared to the airline industry.

Comparing the two airline companies, Boeing could be in a better position to endure headwinds due to its business model of operating in 4 main areas instead of only 3 (Airbus).

Given that GM is a well-known and established company, it could continue to attract investors with its sound business model and be a company investors think of when it comes to diversifying their portfolio, in turn rasing the share price in future.