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Will Boeing stock crash after new issues with 737 MAX emerge?

Will Boeing stock crash after new issues with 737 MAX emerge?

In March of 2019, the shares of the American aircraft giant Boeing (NYSE: BA) experienced a decline of approximately $70 – from about $450 to close to $370. The drop was the direct result of a tragic crash of Ethiopian Airlines Flight 302 – flying a Boeing 737 MAX 8 – that killed all 157 people on board.

The aftermath of the crash – which occurred due to issues with certain systems of the 737 MAX aircraft – was only intensified by the fact that several months earlier, the Lion Air Flight 610 – flying the same aircraft model – crashed 13 minutes after takeoff for very similar reasons. 

In January 2024, the aircraft giant is facing another crisis – again due to issues with the 737 MAX series of aircraft – after an emergency landing that took place on Friday, January 5, 2024, on Alaska Airlines Flight 1282.

Boeing stock drops in pre-market as FAA grounds some 737 MAX 9 aircraft

Friday’s accident, despite not resulting in a fatal crash but only a crash landing, was severely alarming to passengers, investors, the federal authorities, and the public at large, given that it was caused by a factory-installed part of the aircraft falling off shortly after takeoff causing an uncontrolled decompression.

Following the incident, the Federal Aviation Administration (FAA) ordered airlines to stop using certain Boeing 737 MAX 9s. The incident and the response caused many to believe that Boeing would enter ‘damage control’ mode and that it would face a sharp decline in the stock market due to fears over its models and the possible fallout of the accident.

Indeed, in the pre-market on Monday, January 8, the shares of the aircraft manufacturer rapidly crashed by 8.33% by the time of publication – down to $228.63 from the Friday market close price of $249.

The incident is likely to have further ramifications. Not only has the company’s stock failed to recover to its 2019 prices following the previous round of accidents, but the most recent incident is likely to have an impact on its 737 Max deliveries to China, which were only resumed in late December 2023.

By press time, analysts have yet to update their forecasts for Boeing, and the company is still, overall, considered a buy with an average 1-year price target of $276.93 and the lowest same-period target of $190. Notably, none of the 32 analysts are suggesting that investors should sell any BA shares they own.

BA 1-year price forecast and analyst rating. Source: TradingView

BA price analysis

The 52 weeks leading up to the accident were fairly strong for Boeing’s shares. In this period, the stock rose 19.38%. Its climb was particularly significant in the final two months of 2023 as Boeing went from approximately $180 to $250.

BA 1-year price chart. Source: Finbold

The first days of 2024, on the other hand, saw a decline in the price of BA shares even before the crash landing. In the last 5 days, the stock is down 4.34%. Its 1.66% climb during Friday trading has also been effectively wiped out in the Monday pre-market, and there is a strong chance that the fall will continue after the morning bell rings.

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