Aircraft manufacturer Boeing’s stock rose on Thursday despite a turbulent week in the market which saw another plane crash and the release of some damning internal emails.
Jan. 10, 2020
Over the past year, we have become more accustomed to seeing that Boeing’s (NYSE: BA) stock is down. However, today we are asking why exactly it has gone up? Despite the tragic crash of another Boeing plane in the company’s 737-800 range — not the currently grounded MAX model — the company’s stock does not appear to be going into the spiral one might expect.
Will Boeing stock stay up?
Another disaster emerged then this week, as news of a tragic crash in Iran involving a Ukrainian Airlines Boeing 737-800 plane, which claimed 176 lives. One would think that yet another crash would be a potential nail in the coffin of Boeing, but its stock has managed to stabilize and was even up by market-close on Thursday. This could be due to ongoing investigations that have led many to believe that the crash was caused by outside forces amidst ongoing military tensions in Iran and not a fault of the aircraft.
It is unclear whether Boeing can maintain its current trajectory — this will not be the last pun in this article — given recent events. Just last month, Boeing saw its stock plummet upon the news that it was halting production of its grounded MAX range of planes following two fatal crashes and subsequent investigations. This debacle has already cost the company billions and had wide-ranging effects on the economy as a whole. Boeing is one of the United States’ biggest exporters, selling more than the likes of Apple (NASDAQ: AAPL), Ford Motor (NYSE: F), and even General Motors (NYSE: GM).
Shortly thereafter, Boeing hit some more turbulence and dismissed CEO Dennis Muilenberg, who had failed to weather the storm the company was subject to over the previous 15 months.
Is Boeing stock going to fall again?
On Thursday night, a series of internal messages from Boeing were released as part of an ongoing Federal Aviation Administration (FAA) investigation into the 737 MAX aircraft. This included one email from an unnamed employee which stated: “This airplane is designed by clowns who in turn are supervised by monkeys,” Further questions were raised regarding the company’s willingness to evade scrutiny from regulators, flight crews, and the public regarding the production of the plane. Hundreds of messages were disclosed, and the findings may cause the investigation to go on for months and may even look into other models built by the company.
In the meantime, Boeing has reportedly been forced to put aside $5 billion to compensate its airline customers over the MAX issue. This includes some of its biggest customers such as Southwest Airlines (NYSE: LUV) in the U.S. and Ryanair (LON: RYA) in Europe. Airbus (EPA: AIR), which is Boeing’s biggest rival, will also look to capitalize on any dip in Boeing’s current situation.
It is certainly a tough time for the company, which will leave Boeing investors with a lot to consider.
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