If you have an ad-blocker enabled you may be blocked from proceeding. It is trading on FCF which will be huge in 2023. Price of capital has to go up. Boeing stock: Prices keep falling after 737 MAX 8 crash - CNN Philosophically speaking is a business worth owning if it lacks these three value-creating characteristics? Here is a Long term chart showing that. Airbus Soars Past Boeing at the Paris Air Show, Why It Makes No Sense to Invest in the Airline Industry (and Why Boeing and General Electric Investors Will Do It Anyway), Cumulative Growth of a $10,000 Investment in Stock Advisor, Join Over Half a 1 Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. The second 737 Max crash occurred in March 2019. By accessing this page, you agree to the following Boeing (NYSE: NYSE: BA) on Wednesday fell 8.8% -- the stock's biggest one-day decline since May -- after the aircraft maker lost more money in Q3 than Wall Street had expected. Shares of Boeing are considerably less expensive than they were in late February, and the company remains optimistic the 737 MAX will be cleared to return to the skies by mid-year. Why Boeing Stock Just Dropped 15.5% | The Motley Fool All opinions expressed herein are not investment recommendations, and are not meant to be relied upon in investment decisions. Recommend you follow DB as he presents solid analysis on BA. Orders, deliveries, FCF and more. But as Reuters now reports, after reviewing bids from the defense contractors, Canada has concluded that the F/A-18 does not, in fact, meet Canada's requirements, and Boeing is out of the running. If a recession does not appear (which is an incredible long shot according to the inverted Treasury yield curve) or Boeings orders and production expand strongly during one (which has never happened in modern times), sure the stock quote could theoretically climb a little. The Motley Fool has a disclosure policy. Going all the way back to 1987, tangible book value (real physical assets like cash, inventory, plant & equipment, minus total liabilities) has nosedived deep into negative territory, especially measured from 2015 (-$28 billion currently or -$47 per share). Why Boeing Shares Are Falling Today | The Motley Fool The Motley Fool has a disclosure policy. Invest better with The Motley Fool. I have no business relationship with any company whose stock is mentioned in this article. What happened Shares of Boeing Co. ( BA -0.32%) fell. Shares of Boeing Co. dropped 0.24% to $212.10 Friday, on what proved to be an all-around grim trading session for the stock market, with the S&P 500 Index. Interest expense on this debt mountain is quite elevated now, and could rise dramatically over time if interest rates do not come back down in 2023-24, at the same time as new borrowing may be required to pay its bills during a recession. Boeing's stock took a beating Tuesday amid reports that its Max 737 could remain grounded for months longer than initially expected. You don't have to worry as much about an outlier takeover bid for the company, because of its large size and rotten financials. Boeing now holds its worst financial setup going into a recession in modern times. Key Points Analysts expect a 42% drop in Boeing's third-quarter earnings, scheduled for Wednesday morning. The $11.9 billion dollar net loss is the largest in the aerospace giant's more than 100-year history and a big part of the reason is the coronavirus pandemic. Learn More. Cash costs for a battery-based airliner, P2F conversion constrained by feedstock, certification issues, Machinists at Spirit vote to end strike; will return to work on July 5, Does the new weight bump turn the A330-900 to a trans-Pacific aircraft? Although the company's . Mr. Franke was ranked #1 in the Motley Fool CAPS stock picking contest during parts of 2008 and 2009, out of 60,000+ portfolios. Boeing's 737 Max Cleared To Return To European Skies, Regulator Says, Boeing To Pay $2.5 Billion Settlement Over Deadly 737 Max Crashes, Boeing To Pay $2.5 Billion Over 737 Max Fraud, Faces No Other Charges. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. A Boeing 737 MAX in flight. Instead, they seem to be interpreting the second news item as simply confirming the implications from the first, the one about the debt downgrade. In other words, if airlines and governments stopped purchasing all new planes, and assuming Boeing went into bankruptcy, the shares have NO underlying net asset value to back up your investment. Cloudflare Ray ID: 7e3ee1cf3c605a22 That's the good news, but investors going along for the ride should buckle up and prepare for a long journey ahead. The good news is that, despite burning through $3.2 billion in cash in the first quarter, Boeing continues to expect free cash flow to turn positive this year. Making the world smarter, happier, and richer. "COVID-19 case rates continue to be high and travel restrictions remain in place, putting significant pressure on passenger traffic. "We expect it will take around three years for travel to return to 2019 levels, and a few years beyond that to return to our long term growth trend," he said.Demand for the biggest commercial jets, widebodies, including the 777 and 787 that fly long-haul international routes, is particularly down and expected to remain so. Airbus Stock Falls as Plane Maker Posts Heavy Loss | Barron's The Motley Fool has a disclosure policy. Source: Alex . The Motley Fool recommends Lockheed Martin. With less than an hour to go in the trading day, as of 3:20 p.m. The company is basically tracking the S&P 500 during calendar 2022 and is down a relative -24% to this blue-chip index since May 2021, with Negative Volume Index and On Balance Volume patterns not very supportive of future price gains. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Making the world smarter, happier, and richer. To report a factual error in this article. 15.204.210.172 But Boeing is in talks with key customers including Southwest Airlines and should be able to work through its inventory over the next year. Boeing Stock: Under $100, Boeing's a Nice Long-Term Buy | InvestorPlace Discounted offers are only available to new members. Below are charts of the yield curve from 1-month to 30-years for the current setup and December 2021. That in turn could eat into long-term demand for new aircraft, or at least temporarily stunt the growth of Boeing's order book. With the year almost over, we're taking a look at all 30 stocks in the Dow Jones Industrial Average starting with the worst performersBoeing and Walgreens Boots Alliance and working our . On top of this bleak civilian order outlook, government military spending on planes can come under pressure in future years as a way to control rising fiscal deficits during economic contractions. Interest rates have to go up. But heard a different way, West's comments struck a more downbeat note. For example, if it costs banks 4% to 5% to find capital from savers, while new loans are made at 6.5% mortgage rates or the 7% prime rate for businesses, little room for error exists if default rates and administration costs continue to rise in a slowing economy. I wrote this article myself, and it expresses my own opinions. That wasn't how today was supposed to go. Learn More. Shares of aerospace giant and certified blue chip stock Boeing (BA -0.24%) are looking more red than blue (or green) today. Bjorns Corner: Why e in ePlane shall stand for environment, Part 13. The pandemic order cancellation excuse has severely weakened Boeings financials, as management decided to go deep into debt in 2020 to keep its doors open and supplier/worker payments up to date. The company said . Airbus Soars Past Boeing at the Paris Air Show, Why It Makes No Sense to Invest in the Airline Industry (and Why Boeing and General Electric Investors Will Do It Anyway), Cumulative Growth of a $10,000 Investment in Stock Advisor, Join Over Half a 1 Million Premium Members And Get More In-Depth Stock Guidance and Research, revealed a lot of embarrassing details about internal operations, Copyright, Trademark and Patent Information. The Boeing Company (BA) Stock Price, News, Quote & History - Yahoo Finance Todays inversion could be a reason for bullishness on long bonds here, while projecting a lower Dow Jones Industrial Average in early 2023 and S&P 500 Index over time here. The ultimate insider (CEO) bought $4 million of BA at about $160 per share recently. Why Boeing Stock Is Falling Today | The Motley Fool In my mind, an investment in Boeing requires too much faith and hope, ignoring truth and consequences. A major recession in 2023 would be horrific news for the companys future, and that may be what we get! Analysts Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Short position through short-selling of the stock, or purchase of put options or similar derivatives in BA over the next 72 hours. This is part of a good trend as BA works hard to improve Defense operations. Coming at exactly the wrong time for this corporation, a negative tangible book value and extremely overleveraged balance sheet, with no free cash flow or operating income, at a time of rising labor wages and interest expense could spell real trouble for underlying business worth soon. The Dow Jones was down 7%. There's more to real news than a news release. Boeing suffers from the self-inflicted wounds that grounded the 737 MAX and the COVID-19-induced near shut down of the airline industry. To the contrary, as I pen these words, it actually seems the Dow is up a few points. BA stock has already been through a massive long term bear market with very little now priced in for some massive upside from an economic recovery. To make the world smarter, happier, and richer. The coronavirus' massive worldwide economic disruptions have humbled a euphoric decade-long rally in under a month. The recertification gives Boeing the green light to begin moving the more than 400 planes built but not delivered during the grounding. He says the company is "facing serious market challenges with this terrible downturn, basically starting up the 737 Max program again, which is inherently costly, and of course, wrestling with developing this very expensive new derivative of the 777 that's entering a market that really doesn't want a plane in that class right about now. Weakest Boeing Financials Going Into Recession: $100 Price Target To boot, total liabilities as a ratio of assets (including intangibles of $10 billion) have steadily doubled from 0.55 in 1998 to 1.12 today. Many on Wall Street like to review the spread between 1-year and 2-year yields vs. 10-year and 20-year ones. And then there's the 737 Max, a plane that Boeing had staked its future on as it became the best-selling commercial jet in the company's history before two crashes, five months apart, that killed 346 people.Wednesday the European Union's aviation safety agency became the latest to approve fixes and design changes to a flawed automated flight control system that investigators say played a major role in causing the crashes, and the agency will allow the troubled jet to return to passenger service. This year, the company has faced two major challenges. Part 20. Bjorns Corner: New aircraft technologies. BA Stock | News | BOEING Stock Price Today - Markets Insider *Average returns of all recommendations since inception. The Motley Fool has a disclosure policy. But perhaps the scariest news of all for Boeing stakeholders is company financials are the least healthy in decades. BA came down to support twice in its big correction of late -- April 2020 and April 2022. Cost basis and return based on previous market day close. 1. But because the purchase of 65 F-35s might cost as much as $30 billion, Canada has been considering other options, including buying upgraded F/A-18 fighters from Boeing, or other models from . For more than a decade, Canada has been weighing the merits of buying F-35 stealth fighter jets from Lockheed Martin (LMT -0.64%) to replace the aging CF-18 jet fighters that currently make up the bulk of its fleet. By Al Root Updated Oct. 14, 2021 3:40 pm ET / Original Oct. 14, 2021 8:27 am ET Order Reprints Print Article Boeing has another quality problem. Second, though this is related to the first, The Wall Street Journal is reporting that Boeing is in talks with the White House and with legislators in Congress, trying to convince them both to back a bailout for the airplane maker and include it in a package of relief measures being worked up to salvage the American economy. The quarter included more than $200 million in one-time charges related to lost business due to sanctions on Russia and more than $1 billion in charges due to delays in its T-7A Air Force trainer plane and the new Air Force One. Boeing shares have lost more than half their value since the start of 2020, and the company's latest results provide no clear indication that it will be able to quickly regain its footing. Categorically, the 1% spread difference between 1-year rates and the 30-year T-bond is wickedly bad news for the economy, at a distance I have never before experienced over 36 years of trading. Why did Boeing's stock drop today? Losses deepened on (NYSE:BA) Earnings, free cash flow, and book value are all negative. I don't think the recession comparisons are equal to current day's situation. The author undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional materials. If anything, I am more bearish now, keeping my Sell rating for the next 12-month investor outlook. Combined, this would be a big chunk of change supporting Boeing on both its costs side and its demand side (because those airlines would presumably turn around and hand some of their money over to Boeing to buy planes). Boeing lost another 12% on the first day of April, a reminder that just because the calendar changed, the issues weighing on the stock have not vanished. A Boeing F/A-18. It ended on 7 April 2020. Today's not the worst day this market has ever had -- not by a long shot. You can email the site owner to let them know you were blocked. Stock Advisor list price is $199 per year. In February it reportedly signed an agreement with General Electric to cover payments for jet engines, and it seems likely to be forced to agree to subsidize pilot training sessions for 737 MAX customers before the plane returns to service. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Calculated by Time-Weighted Return since 2002. YCharts - Boeing vs. S&P 500 Total Returns, Recession Shaded, June 2019 to December 2020, YCharts - Boeing vs. S&P 500 Total Returns, Recession Shaded, July 2007 to December 2009, YCharts - Boeing vs. S&P 500 Total Returns, Recession Shaded, October 2000 to March 2003, YCharts - Boeing vs. S&P 500 Total Returns, Recession Shaded, March 1990 to March 1993. Nevertheless, credit tightness is now the norm, as it is becoming less profitable for banks to make new loans at current spreads. Boeing's trying to navigate around a coronavirus storm -- and failing. Invest better with The Motley Fool. BA is not trading on fundamentals. I will have to start following you. Paul was consistently ranked among top investment advisors nationally for stock market and commodity macro views by Timer Digest during the 1990s. ET, Wednesday, Boeing stock is down 2%. At other times, high short-term interest rates grind the expansion into submission over 6-12 months. It's not a crippling blow for the company, but this still represents a good chunk of the roughly $26 billion in annual sales Boeing generates from defense, space, and security, according to data from S&P Global Market Intelligence. Unilever's share price went from $52.32 per share to $51.37 per share, erasing an estimated $2.5 billion in market cap as social media users called for a boycott, according to Google finance data.The packaged goods conglomerate saw its market cap drop from roughly $133 billion to $131 billion because its share price decreased. Efficient flying, The Small Airliner Problem, Part 10. While their debt is clearly substantial, the biggest difference between now and previous recessions is Boeings production backlog. To summarize, Boeing shares are not cheap, unless business sales pick up markedly next year. Thanks for reading. 6 reasons Boeing's financial picture may be brighter than most assume So this call on BA is actually quite out of synch with both BA stock and where we are in the airline capital cycle. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. After a long wait the 737 MAX has been cleared for takeoff. Why Shares of Boeing Fell in February | The Motley Fool Returns as of 07/09/2023. On 20 February 2020, stock markets across the world suddenly crashed after growing instability due to the COVID-19 pandemic. This is an important moment for Boeing, but investors should be careful not to get ahead of themselves. Click to reveal Why Boeing Stock Dropped Today | The Motley Fool Boeing Co. stock outperforms market despite losses on the day Why Boeing Stock Keeps Going Down | The Motley Fool Boeing down sharply second day in a row. Last years upsloping yield curve (from left to right, short to long duration) is typical of the early to middle stages of an economic cycle, where its easier for banks to earn a profit by borrowing money from savers at far lower cost than the long-term loan rates received through new loan originations or investments in the financial system. But here's the thing: Boeing's CFO also warned investors that shortages of parts are hindering production of the 737 MAX, such that even if China does clear the plane for service, that won't necessarily translate into more planes being built and sold. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Shares of Boeing (BA) fell more than 11% over the past two days: The . If Boeing is able to hit the analyst consensus marks below, it will be the first time in modern history the company has been able expand nicely during a likely recession. The information and data in this article are obtained from sources believed to be reliable, but their accuracy and completeness are not guaranteed. So, if a recession is coming, do you want to own a deep cyclical, capital-spending dependent Boeing? Boeing has seen its order book fall during in 2020, and is cutting production of all commercial models. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Please disable your ad-blocker and refresh. One final consideration: the absence of traditional earnings and cash flow, in combination with record company debt argues Boeing is an excellent short-sale candidate. Boeing Reports Nearly $12 Billion Loss In 2020 Due To Pandemic - NPR $211.16 Price as of June 30, 2023, 4:00 p.m. First, Barron's reports today that S&P Ratings just downgraded Boeing's credit rating two notches to "BBB" -- letters that don't mean much to most investors, but that tell lenders that Boeing debt is now just a couple points away from being turned into junk bonds. Image source: Boeing. Here are three reasons why Boeing stock is in even worse shape than the Dow. And with the market for such giant, long-haul jets evaporating during the pandemic, Boeing is now pushing back the plane's entry into commercial service into late 2023. The post-crash investigations have revealed a lot of embarrassing details about internal operations at Boeing and caused the company to replace its CEO. Boeing (BA) Q2 2020 reports earnings, warns of new job cuts - CNBC Cost basis and return based on previous market day close. Airbus stock in similar decline. Airlines have reacted to plummeting demand for travel by cutting flights and grounding planes, and even if demand returns when the pandemic is contained, the U.S. economy might by then be in a recession. Just over a year ago, the 104-year-old aircraft and defense manufacturer was ramping up deliveries on its signature product, the super-fuel-efficient 737 Max, a huge hit boasting 5,000 orders, and. Really, the only way to value Boeing today is on sales (Price or EV to Revenues), which is near a modern-record high in December 2022. Don't look now, but aerospace giant Boeing (BA -0.24%) has been on kind of a losing streak lately -- one that began with its report of a billion-dollar quarterly loss last month and is ending with Boeing wrapping up a five-day-long slide in share price today. In January 2020, Fitch Ratings lowered Boeing's long-term credit rating to A from A, due to risks of delays in returning the MAX to service. The Motley Fool has a disclosure policy. Boeing down sharply second day in a row. Airbus stock in similar In the end, credit standards (creditworthiness from borrowers) are raised to prevent loan losses in the future, and originators may decide not to make riskier-loans, even ones approved last year. Boeing lands largest bond deal of 2020 | Nasdaq Typically during recessionary periods, passenger airline traffic and demand for new planes plummets, leading to horrible operating performance for the company. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. On the 18-month chart below of daily price and volume changes, its hard to argue the Q4 2022 upswing is anything of real consequence from a momentum perspective. That lessened the near-term risk of bankruptcies rippling through Boeing's supply chain or customer list. Any projections, market outlooks or estimates herein are forward looking statements and are based upon certain assumptions and should not be construed to be indicative of actual events that will occur.