Boeing (BA) is in big trouble because of a terrifying accident. Pieces full off a 10-week-old 737 Max 9 airliner minutes after takeoff.
A refrigerator sized hole opened in the 737’s fuselage, causing pieces of seats, phones, and a passenger’s shirt to get sucked out. CNN reports the Alaska Airlines plane was leaving Portland, Oregon, for Ontario, California, when the hole opened.
Moreover, United Airlines (UAL) executives allege their mechanics found loose bolts on some 737 Max 9 airliners. United executives call the loose bolts an “installation issue.”
Consequently, the Federal Aviation Administration (FAA) grounded all 737 9 Max 9 airliners in the United States. Frighteningly, this is the latest 737 Max 9 crisis. Critics blame the airliner for fatal crashes in Indonesia in 2018 and Ethiopia in 2019 that killed 346 people.
Experts have found similar quality problems with Boeing’s 787 Dreamliner and 777 airliners. Critics blame cost-cutting at Boeing for the quality issues. Hence, the corporate slogan “If it’s not Boeing, I’m not going,” is now a cruel joke. Instead, today’s slogan is: “if it’s Boeing I’ll take the Airbus.”
Boeing (BA) rises and falls
The Portland incident, which included plane parts falling on a suburban neighborhood, ended a Boeing Co (BA) recovery.
For example, Boeing’s share price fell from $260.35 on 28 December 2023 to $225.76 on 9 January 2024. Comparatively, Boeing’s price rose from $208.57 on 9 January 2023.
Boeing’s revenues and income were rising before Portland. For example, quarterly revenues rose by 13.46% from $15.96 billion on 30 September 2022 to $18.10 billion on 30 September 2023. Similarly, the quarterly net loss fell shrank by 50.05% from -$3.2 billion on 30 September 2022 to -$1.64 billion on 30 September 2023.
However, Boeing still reports some dismal numbers. For example, BA had a -9.04 net profit margin and a -3.26 earnings per share on 30 September 2023.
How Much Money is Boeing (BA) Losing?
The question that value investors ask about Boeing (BA) is how much money is it losing?
Losses are mounting at Boeing. For instance, quarterly cash flow fell from $3.4 billion on 30 September 2022 to -$443 million on 30 September 2023. Similarly, Boeing reported just $22 million in cash from operations on 30 September 2023. Google Finance estimates the cash from operations shrank by 99.31% between September 2022 and September 2023.
The net cash flow shrank by 113.03% or $443 million between September 2022 and September 2023. Meanwhile, the free cash flow shrank by 87.14% to $388.5 million.
What Value Does Boeing (BA) offer?
Boeing (BA) is losing value and cash. For example, the Total Assets fell from $137.56 billion in September 2022 to $134.28 billion in September 2023.
Meanwhile, the cash and short-term investments fell by 6.21% to $13.37 billion on 30 September 2023. Conversely, the Total Liabilities fell from $155.19 billion on 30 September 2022 to $151 billion on 30 September 2023.
Thus, Boeing is losing cash and value, yet its shares are still over $200. I think Mr. Market grossly overvalues Boeing because of its problems. It is obvious they did not solve the quality control problems. Indeed, quality could be worse.
To explain, Boeing’s signature products, airliners, are no longer safe or reliable. Yet Mr. Market paid more for the company as it lost value.
Therefore, I think Boeing (BA) is a terrible stock investors need to avoid. I predict Boeing’s shares will keep falling. More news articles about Max 737 9 problems will accelerate that fall.
Investors need to avoid Boeing until the company builds safe airliners again.
*https://www.cnn.com/2024/01/09/business/boeing-orders-deliveries-2023/index.htm
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