Wednesday, November 13, 2024

Boeing | Strike | Nov 13 2024

Boeing Stock Is Down Again. Here Are the Reasons Investors Should Pay Attention To.

Nov 12, 2024, 1:29 pm EST 

Boeing 

BA

-3.91%

 stock slid again Tuesday, but not all the reasons for the drop are good ones.

There are a few potential factors causing investors to feel increasingly nervous after getting—ostensibly—good news with the ending of the company’s contentious labor strike. Among them are a drop in monthly deliveries and issues at a key Boeing supplier, Spirit AeroSystems  SPR -1.93%

.But what investors really should be focusing on are two other issues: U.S.-China tensions and Boeing’s stock chart.

President-elect Donald Trump has threatened China with lofty import tariffs that could lead to a trade war. Boeing is a big exporter of U.S. goods to China, and could be hurt by any trade retaliation.

Through midday trading, Boeing share were down about 6% since the election.

Some traders, meanwhile, are concerned that the Boeing stock chart is looking weak. Technical stock market analysts typically don’t concern themselves with fundamentals such as earnings and cash flow. They look at charts to get a sense of where investors have bought and sold shares in the past.

Boeing stock is near the bottom of its support, explains CappThesis founder and market technician Frank Cappelleri. Support is where investors and traders have bought in the past.

Boeing shares were down 2.5% in midday trading at $145.25 apiece, while the S&P 500 SPX

+0.09%  and Dow Jones Industrial Average DJIA +0.07%  were off 0.3% and 0.4%, respectively.

“If [support] doesn’t hold, there’s no near-term support, which could make for a slippery slope,” adds Cappelleri. “The October 2022 low near $121 is [the] next identifiable reference point after that.”

The stock chart might be the biggest worry for investors right now.

Of course, other factors like lower deliveries and supplier problems still matter, but they shouldn’t be catching investors off-guard.

Boeing said Tuesday delivered 14 planes in October, down from 34 delivered in October 2023. That should surprise no one (unless they were impressed by 14). Some 33,000 Boeing workers in the Pacific Northwest were on strike for all of October.

Low production has been a problem for the company all year. Through October, Boeing delivered 305 jets in 2024, down from 405 over the same span of 2023.

The delivery numbers likely aren’t dragging down the stock, nor are problems at a key supplier. Tuesday, Spirit AeroSystems disclosed that Boeing would provide it with $350 million to shore up finances. Spirit Aero makes the fuselage for the 737 MAX, among other products.

More cash out the door isn’t great news, but Boeing is acquiring the supplier as part of its plan to improve production quality. The deal is slated to close in 2025. What’s more, Spirit Aero’s cash flow problems arise from the same issues as Boeing’s recent cash flow problems—low plane production.

Write to Al Root at allen.root@dowjones.com

 

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