Between General Motors and Facebook, which is favored and why?

• A. Facebook
• B. General Motors
• C. Both
• D. Neither

Answer: (A)

This item is testing relative growth potential and cash-flow resilience under a growth-focused scenario. Facebook stands out because it operates a digital platform with a massive, active user base and advertising revenue that scales efficiently. As more users and engagement drive more ad impressions, revenue grows with relatively small incremental costs, leading to high operating leverage and strong gross margins. This scalability often supports faster earnings growth and greater margin expansion over time, which investors tend to favor in growth-oriented analyses.

General Motors, on the other hand, is a cyclical, capital-intensive automaker whose profits swing with global auto demand, commodity prices, and supply-chain dynamics. It requires substantial ongoing investment in new models, plant capacity, and components, which pressures margins during downturns and timeframes where demand is tepid. In a context emphasizing scalable growth and margin expansion, Facebook is the stronger pick.

That said, if the scenario prioritized steady cash flow, dividends, or defensive characteristics tied to a more traditional manufacturing business, GM could be more favorable. But given a growth-and-margin emphasis, Facebook fits the favored position.