Like many other companies in the travel industry, Boeing has made the news for its rapidly falling stock price and financial struggles throughout the global coronavirus crisis. As the company now considers actions such as employee layoffs, dividend cuts and government assistance, traders wonder whether Boeing's stock price will continue to fall and what impact this will have on the company's viability. At the same time, the company continued to struggle due to the grounding of one of its major jets. Catching up on recent Boeing stock news and hearing what analysts say can help give traders a picture of what may lie in Boeing's financial future.
Boeing's Tough Financial Situation
Long before the coronavirus made a major dent on the stock market and airline industries, Boeing faced major setbacks due to its 737 Max plane that had arrived at airlines in 2017. While the plane was high in demand, it made the news in both 2018 and 2019 after production defects led to deadly crashes. This resulted in a government investigation about the plane's certification, and in early 2019, production had to stop on the 737 Max. At the same time, Boeing faced more financial troubles as its existing 737 Max jets had to remain grounded at airports. Unfortunately, reports in January 2020 estimated the jet may not take off again until summer 2020.
Not only has the Boeing 737 Max woes caused dips in the stock price over the last few years, but the delay announcement brought the stock price to a 52-week low of $306 this January. Furthermore, the situation left the company in a very vulnerable position that would worsen in March when the coronavirus would cause airline stocks to sharply decline in response to travel bans, lockdowns and fewer flights over health concerns and event cancellations. Ultimately, these struggles would cause Boeing to spend billions in loans, seek government intervention and get downgraded by Standard and Poor.
Recent Boeing Stock News
Boeing's stock price drops in February 2020 began close to halfway through the month as the company faced setbacks from the 737 Max grounding alongside the earlier impact of the coronavirus on airlines. Concerns about future growth and demand led to the stock price falling from a closing price of $347.45 on February 12 to a low of $275.11 on February 28. However, investors still had hope for the company due to its strong assets, despite some concern about whether the new CEO could take action quickly to prevent future damage.
However, it was in March 2020 when Boeing's stock took a downturn that made investors question whether the company would survive the crisis. As the coronavirus strongly gripped the United States and Europe by the second week of March, Boeing saw its stock price dip from a closing price of $262.33 on March 6 to $154.84 on March 12. The drops would continue as the airline industry struggled and investors felt less confident due to recession fears, a potential government bailout and reductions in flights in many locations. Selloffs would lead to a closing price of $101.65 on March 19, with the price falling further below $100 during after-hours trading.
Read More: Why Do Stock Prices Drop?
Analysts' Predictions for Boeing
As Boeing's stock continues to fall as the coronavirus wreaks havoc on the airline industry, some analysts feel negative about the company and its stock price's future. Jim Cramer believes that Boeing needs immediate government help to avoid running out of cash and going out of business. The recently proposed aid for the airline industry from the White House may help the struggling company soon. But at the same time, some investors feel even more concerned with the prospect of a government bailout, and this can continue to drive down the stock price further.
On the other hand, investor Tim Worstall sees the company's stock as currently oversold due to investors worrying about less demand for flights and the current travel restrictions. While he doesn't underestimate the company's financial issues, he does feel that investors may be overreacting to a potential worst-case scenario for the travel industry and driving down the stock price too far. His outlook for the company is cautious but does show some hope for the company's long-term viability and growth in Boeing's stock price.
Investor Chris Lau feels more optimistic about Boeing and estimates the company's long-term stock price to be worth $200 to $325. He attributes this potential turnaround to if the company can fix the issues with its 737 Max, get it certified for safety and resume sales within the next couple of quarters. However, he does disclose that investors can't be certain when airline traffic will resume as normal, and he warns that airline bankruptcies could put a damper on plane orders.
What Should Traders Know?
Barrons warns that travel stocks may experience ongoing declines during the pandemic, so traders should keep that in mind and keep a close eye on Boeing's stock news when they decide to buy and sell the company's stock. While government help for Boeing may be on the way, whether this will improve investors' confidence is yet to be seen. MarketWatch warns a bailout would add more debt and could even further harm Boeing in the long run. Investors should also closely watch for updates about the Boeing 737 Max as its has a large impact on Boeing's finances too.
The coming weeks and months should give insight on how the airline industry handles the setbacks from the pandemic and whether Boeing gets government help for its financial struggles. If you're considering investing in Boeing, you might consider speaking with a financial analyst to carefully weigh the pros and risks of adding the stock to your portfolio.
- CNBC: Jim Cramer Says Boeing ‘Will Run out of Money’ If It Is Not ‘Saved’
- Seeking Alpha: Boeing Oversold On Coronavirus Worries
- Seeking Alpha: Boeing: Tailwind Is Coming
- Fortune: Boeing Stock Plunges Again After Coronavirus Bailout Quest Spooks Investors
- Investor Place: Boeing’s 737 Max Is Critical to Its Future
- CNBC: The Year That Changed Boeing: Airplane Maker Struggles to Regain Footing Since First 737 Max Crash
- NPR: Boeing 737 Max May Stay Grounded Into Summer
- CCN: Boeing Stock Crashes to 52-Week Low Following Shocking Report on 737 Max Grounding
- Business Insider: Boeing Burned Through $13.8 Billion of Loans in Just Over a Month as Coronavirus Derails Its 737 Max Recovery
- Forbes: The Coronavirus Corporate Credit Downgrades Are Here
- The Motley Fool: Why Shares of Boeing Fell in February
- Nasdaq: Boeing Stock Prices
- Nasdaq: Why Airplane Stocks, Both Military and Civilian, Are Down Today
- Barron's: Airline Stocks Are in a Nosedive. A Bailout Might Not Help.
- The Seattle Times: Boeing and the Airlines Seek Massive Bailout; Critics Ask About Sharing the Benefit
- Wall Street Journal: Boeing Considers Dividend Cut, Layoffs Amid Cash Drain
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Ashley Donohoe has written about business and technology topics since 2010. Having a Master of Business Administration degree, bookkeeping certification and experience running a small business and doing tax returns, she is knowledgeable about the tax issues individuals and businesses face. Other places featuring her business writing include Zacks, JobHero, LoveToKnow, Bizfluent, Chron and Study.com.