Can General Electric Survive The COVID-19 Recession

A picture taken on September 17, 2019 shows the logo of US giant General Electric, in Belfort, ... [+] eastern France,. - About a hundred employees of General Electric in Belfort accompanied on September 17, 2019 the transport of a gas turbine from the site to show their expertise and emphasize that they do not intend to block the production. (Photo by SEBASTIEN BOZON / AFP) (Photo credit should read SEBASTIEN BOZON/AFP/Getty Images)AFP/Getty Images

General Electric’s stock (NYSE: GE) has lost over 45% of its value since the beginning of the year due to the outbreak of COVID-19. The commercial aviation industry is rattled, and GE, which manufactures aircraft engines, is no exception. Fading consumer demand, reduced discretionary spending, and stay-at-home orders, resulting in minimal air travel continue to take its toll on the airline industry. With Avianca filing for bankruptcy protection, the mere survival of airline companies has come into question, and this will have a significant impact on the companies that manufacture engines and other components used in aircraft. While a bankruptcy doesn’t necessarily means a company going out of business, it can also include massive financial restructuring.

Trefis analyzes the potential impact of COVID Recession on General Electric in an interactive dashboard with a focus on General Electric’s liquidity reserves and concludes that the company is in a strong financial position, and it will survive the COVID-19 recession. Although a COVID recession will impact the company’s revenues, cash flows, and its capital expenditures, we believe the company has sufficient financial reserves to sail through this pandemic.

Impact On General Electric’s Revenues

Impact On General Electric’s Cash Flows

Cash Balance Impact


To sum things up, General Electric can successfully weather a recession through Q3/Q4 and a 40% decline in revenues by cutting CapEx, share repurchases, not increasing the dividends, and raising $18 billion in new capital. For an alternative scenario with a 25% change in revenue, see our full analysis of the impact of COVID recession on General Electric.

Our dashboard forecasting US COVID-19 cases with cross-country comparisons analyzes expected recovery time-frames and possible spread of the virus. Further, our dashboard -28% Coronavirus crash vs. 4 Historic crashes builds a complete macro picture. Additionally, the complete set of coronavirus impact and timing analyses is available here.

While it has lost 45% of its value thus far this year, General Electric appears to be a good buying opportunity at the current levels.

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