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Boeing Has Lost ~$17 Billion in Market Value since Ethiopia Crash

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Apr. 8 2019, Published 8:08 a.m. ET

Boeing stock fell

Before the Ethiopia crash on March 10, Boeing (BA) stock was riding high on growing optimism about its revenues and cash flow growth. The company had several back-to-back quarters of strong revenue and earnings growth, which had instilled investor confidence in the stock. Moreover, Boeing’s adjusted EPS had surpassed Wall Street estimates in all the trailing 11 quarters and had grown in the double-digit range in the last nine quarters.

A huge order backlog along with the announcement of increased production output and pricing in January for the 737 Max series planes made investors and analysts optimistic about Boeing’s future performance. As of March 8, Boeing’s stock had gained 31% in 2019.

However, after the Ethiopia crash, Boeing stock has witnessed a massive sell-off. Since March 10, the air defense contractor (XLI) has lost 7%, or ~$17 billion, of its market value. The latest sell-off has eroded the airplane manufacturer’s YTD gain to 21.5%.

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What’s ahead?

Boeing stock might fall more, as the company announced last week it would cut production for the fast-selling 737 Max planes. A decline in output would result in lower deliveries, thereby hurting the company’s revenues and cash flows. The company is now likely to miss its 2019 shipment target of 895–905 aircraft.

Thus, Boeing is also likely to miss analysts’ first-quarter revenue and earnings expectations. Wall Street analysts project Boeing to report revenues and EPS of $24.4 billion and $3.94, respectively, which depicts YoY growth of 4.2% and 8.3%.

Until March 8, Boeing was the highest gainer among Dow 30 stocks. However, after the Ethiopia crash, it has slipped to the fifth position. Cisco (CSCO), which has risen 27.4% YTD, has become the top performer among the Dow 30 stocks. IBM (IBM), United Technologies (UTX), and Apple (AAPL) are second, third, and fourth with YTD returns of 26.1%, 25.6%, and 24.9%, respectively, during the same period.

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