Insights

Why Boeing Stock Is Falling Today

What happened
Boeing (NYSE: BA) is a mess, and on a day in the markets when fear is triumphing over greed, investors seem to have little desire to hold on and ride out a restructuring campaign. Shares of Boeing traded down as much as 8% as of early afternoon on Monday, easily surpassing the S&P 500’s 2.8% decline.
So what
Boeing has had a four-year run that the company and its investors would likely rather put behind it. The company’s 737 MAX, which was once expected to be the best-selling commercial aircraft of all time, was grounded in 2018 after a pair of fatal accidents. Those incidents sparked investigations that revealed a lot of embarrassing details about the company’s culture and led to fresh scrutiny, and a number of groundings, of other Boeing designs.
Image source: Boeing.

The 737 MAX is flying again, though it is being made at volumes that are well short of what Boeing had envisioned. But a refresh of the company’s 777 wide-body is years behind schedule, and the 787 Dreamliner has been caught up in probes into various potential manufacturing issues.
The situation has gotten so bad that Dómhnal Slattery, CEO of aircraft leasing company Avolon, said last week that Boeing has “lost its way.”
There isn’t a lot of new news about Boeing on Monday, but with the market sell-off accelerating, investors appear to be trying to drop names with a lot of risk associated with them. Given the rough few years Boeing has had, and the ongoing issues that plague its most important production lines, it is hard to make the near-term bull case for the shares.
Now what
Boeing did get a bit of an endorsement on Monday. Aengus Kelly, CEO of AerCap, predicted that given time Boeing would bounce back.
“Clearly Boeing has got its own issues, but Boeing is a tremendous company that’s helped build the world for the last 100 years and I would never write them off, they still build great airplanes,” Kelly told a conference in Ireland, according to Reuters. AerCap is the world’s largest leasing firms and one of Boeing’s most important customers, so Kelly’s comments are significant.
Kelly is correct in saying Boeing will likely move past its issues eventually, and given that Boeing has a duopoly with Airbus, it is easy to make the case that demand for its products will hold up and investors buying in now will eventually be rewarded.
The issue is it will take time, perhaps even years, before Boeing is able to stabilize itself. And despite its shares gradually losing about 41% of their value over the past year, there is no clear reason to call a bottom yet.
Lou Whiteman has positions in AerCap Holdings. The Motley Fool recommends AerCap Holdings. The Motley Fool has a disclosure policy. –

What happened

Boeing (NYSE: BA) is a mess, and on a day in the markets when fear is triumphing over greed, investors seem to have little desire to hold on and ride out a restructuring campaign. Shares of Boeing traded down as much as 8% as of early afternoon on Monday, easily surpassing the S&P 500‘s 2.8% decline.

So what

Boeing has had a four-year run that the company and its investors would likely rather put behind it. The company’s 737 MAX, which was once expected to be the best-selling commercial aircraft of all time, was grounded in 2018 after a pair of fatal accidents. Those incidents sparked investigations that revealed a lot of embarrassing details about the company’s culture and led to fresh scrutiny, and a number of groundings, of other Boeing designs.

Image source: Boeing.

The 737 MAX is flying again, though it is being made at volumes that are well short of what Boeing had envisioned. But a refresh of the company’s 777 wide-body is years behind schedule, and the 787 Dreamliner has been caught up in probes into various potential manufacturing issues.

The situation has gotten so bad that Dómhnal Slattery, CEO of aircraft leasing company Avolon, said last week that Boeing has “lost its way.”

There isn’t a lot of new news about Boeing on Monday, but with the market sell-off accelerating, investors appear to be trying to drop names with a lot of risk associated with them. Given the rough few years Boeing has had, and the ongoing issues that plague its most important production lines, it is hard to make the near-term bull case for the shares.

Now what

Boeing did get a bit of an endorsement on Monday. Aengus Kelly, CEO of AerCap, predicted that given time Boeing would bounce back.

“Clearly Boeing has got its own issues, but Boeing is a tremendous company that’s helped build the world for the last 100 years and I would never write them off, they still build great airplanes,” Kelly told a conference in Ireland, according to Reuters. AerCap is the world’s largest leasing firms and one of Boeing’s most important customers, so Kelly’s comments are significant.

Kelly is correct in saying Boeing will likely move past its issues eventually, and given that Boeing has a duopoly with Airbus, it is easy to make the case that demand for its products will hold up and investors buying in now will eventually be rewarded.

The issue is it will take time, perhaps even years, before Boeing is able to stabilize itself. And despite its shares gradually losing about 41% of their value over the past year, there is no clear reason to call a bottom yet.

Lou Whiteman has positions in AerCap Holdings. The Motley Fool recommends AerCap Holdings. The Motley Fool has a disclosure policy.

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