Boeing Company【BA】株式ニュース

Boeing Under Pressure: Activists And Warren Buffett Circle
By: Forbes | January 19, 2025

Considered the pillar of the worldwide aerospace industry, Boeing has long related to aviation creativity and capability. But the giant is now negotiating difficult skies under the weight of many financial pressures, strict regulatory monitoring, and constant market dynamics. Recent events have complicated the story; activist investors show a strong interest in the business, and reports of Warren Buffett may be looking at a position. With major ramifications for Boeing's own future as well as for its shareholders and the larger aerospace sector, this confluence of high-profile attention will demand a turning point for the company. The rumor is that activist investors and the great Warren Buffet are circling the company.

Boeing’s Pressure With The Current Situation

Boeing's performance and reputation in the aerospace sector have been greatly affected by several financial and operational difficulties. The firm has struggled with technical problems and manufacturing delays across numerous aircraft models, including the well-publicized grounding of the 737 MAX following two catastrophic accidents. Along with immediate financial losses, these events have tarnished the company's manufacturer credibility and dependability.

Furthermore, complicating Boeing's condition are changes in the world economy brought about by the COVID-19 epidemic. The sharp decline in air travel lowered demand for new aircraft, which resulted in cancellations and deferrals of orders, thereby lowering Boeing's cash flow and income.

Boeing's stock price has clearly suffered in response to these difficulties; it has also shown great volatility. The company's market posture has also been under jeopardy as rivals like Airbus use Boeing's failures to seize more market share. These problems taken together call for a strategic overhaul to rebuild investor and consumer confidence, therefore ensuring Boeing's long-term viability and success in a fast-changing global market.

Activist Investors

Shareholders using their ownership interests in a firm to affect its strategic orientation and management are known as activist investors. Unlike passive investors, activists try to transform the businesses they fund to raise shareholder value in different ways. Their approaches might be pressing for a company to be sold, supporting management changes, restructuring of business operations, corporate policy influence, or financial strategy optimization.

Usually aiming for businesses, they feel underpriced or underperforming in relation to their natural potential. These investors Once active, they often interact with management to argue for measures they think would increase shareholder returns and profitability. Should cooperative negotiations fail, activists could intensify their efforts by asking other shareholders for support, starting public campaigns, suggesting new board members, or, in extreme circumstances, advocating a sale of the firm or its principal assets.

Big companies also frequently find themselves under fire. For instance, Elliott Management's engagement with AT&T resulted in notable changes in the company's approach, including divestments and a more focused attention on basic operations. Similarly, by effectively advocating strategic changes and operational improvements that finally raised Yahoo's market value, Starboard Value was instrumental in rejuvenating the company.

Warren Buffett's possible participation in a corporation like Boeing coupled with possible activist investors might point to a strong convergence of interests meant to propel major reforms. Although Buffett usually chooses businesses with great inherent value and consistent cash flows, the chance to release value through strategic changes and operational enhancements may attract activist investors. Aiming to improve Boeing's market position and operational efficiency, their combined presence can indicate to the market that significant changes may be on the horizon, maybe incorporating both governance reforms and strategy realignment.

Warren Buffett’s Investment Style

Warren Buffett is well known for stressing buying stocks of businesses at prices less than their inherent value, and Boeing is one of those names. Buffett emphasizes businesses with reasonable business concepts, good long-term prospects, consistent earnings power, and capable management. Often driving Buffett to invest in businesses whose stocks are momentarily undervalued by the market, this rigorous approach stresses long-term growth and stability over short-term rewards, but should this be adjusted in the current environment?

Buffett's passion for reputable industrial businesses with a strong competitive advantage, that is, what he describes as a "moat," is well known. Major names in sectors including insurance, energy, and consumer goods abound in his portfolio, where steady returns are usual. Given this backdrop, Boeing might fit Buffett's investing standards. Boeing is still a major participant in the aerospace business, a vital sector with great entrance barriers that can provide long-term competitive benefits despite its recent problems.

Boeing's current value, despite several challenges such as production issues and safety concerns, presents a potential turnaround opportunity that aligns with Buffett's strategy of acquiring robust companies during periods of economic downturn. He might very well be interested if he believes the market has unfairly punished the stock and that Boeing's basic business is strong with an obvious road for recovery. This potential investment aligns with Buffett's history of acquiring top companies at a significant discount, leveraging brief losses in large corporations.

Potential Scenarios For Boeing

Prominent figures like Buffett and activist investors circling Boeing could foreshadow major changes for the aircraft giant. To increase profitability and shareholder returns, activists can support broad reforms like leadership rotations, strategic pivots, or thorough financial restructuring. Those seeking a more concentrated and maybe more profitable company model may also find resonance in their advocacy of the separation of Boeing's several divisions to release hidden value. Often preferred in complicated conglomerates, this kind of split could comprise separating the commercial aviation sector from defense, space, and security departments, therefore enabling each company to maximize its operations and market strategy more precisely.

Should Buffett make his Boeing investment, his strategy might be somewhat different from that of other activist investors. Buffett, known for helping capable current management teams and allowing them freedom to run, may instead affect the strategic orientation of the business with his proven long-term value generation approach. He could advocate for improved capital allocation matching Boeing's core aircraft production strengths or for a streamlining of processes.

These possible approaches used together might transform Boeing into a more simplified and strategically focused company, thereby enhancing its appeal to investors and so confirming its position in both commercial and military aerospace sectors. Aiming to maximize shareholder value in the next few years, the mix of focused activist efforts and Buffett's influence on management and strategic decisions could signal a turning point in Boeing's history.

Implications For Boeing, Buffett And The Activists

The engagement of activist investors and possible interest from Warren Buffett in Boeing might create conditions for significant internal corporate transformation as well as knock-on repercussions throughout the aerospace sector. Should Boeing respond favorably to the demands placed by these investors, we may witness a thorough review of its strategic activities and perhaps a division into more concentrated entities. Such reorganization could improve financial transparency and operational efficiency, therefore enabling Boeing to be more sensitive to technical developments and market needs.

These improvements could indicate a change in the more general aerospace sector toward more competitiveness and innovation. In view of Boeing's actions, rivals may be forced to reconsider their own plans and practices, therefore generating a wave of comparable restructurings or innovations throughout the industry. As Boeing's needs and procedures change, suppliers may find new opportunities or problems; meanwhile, customers, especially airlines and defense agencies, may gain from better products and services emerging from a nimbler and more targeted Boeing.

Moreover, Boeing's adaptation to activist investor techniques could inspire a more active shareholder environment in usually conservative industrial sectors. This might bring a fresh age of governance and strategic clarity in the aerospace and defense sectors by increasing general industry responsiveness to both market conditions and shareholder concerns.

Warren Buffett's possible involvement as well as activist investors points Boeing to a fundamental change that might dictate the future course of the aircraft giant. There is no doubt that Boeing is under pressure. This public awareness emphasizes the great requirement of strategic agility and strong government inside Boeing to properly negotiate the approaching changes. These events are of great relevance to investors and the environment of the world market and demand close observation of Boeing's strategic choices in the next months.

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Is Boeing Stock a Buy? 5 Pros and 1 Big Risk to Watch in 2024
By: Market Beat | November 18, 2024

The Boeing Company BA has had a tumultuous 2024 mired by regulatory issues, negative publicity, lay-offs, rising debt, stock dilution, and mounting losses capped off by a 33,000 worker machinists’ union strike.

The aerospace sector giant has seen its stock lose 46.2% year-to-date (YTD), hitting levels not seen in over two years. Many investors may believe Boeing’s incumbent position as an American monopoly and global duopoly for commercial airplane manufacturing makes it a viable long-term hold despite the short-term pain.

The incoming Trump administration’s core “Made in America” theme drives its initiative to bolster American supply chains in the name of national security. Many believe that Boeing is too vital to America to go under.

Let's take a look at five reasons to buy Boeing stock—and one reason to avoid it altogether.

1. The Union Strike Is Finally Over; Production Can Resume

The Boeing machinists’ strike started on Sept. 13, 2024 when over 33,000 workers walked off the job at the Everett and Renton plants in Seattle. This put an immediate production halt to its Boeing 737, 777, and 767 airplanes, pushing the company's losses to more than $6 billion in its third quarter of 2024. Analysts believe Boeing lost around $5.5 billion in earnings due to the strike.

The resulting cash crunch prompted Boeing to raise over $20 billion in a stock offering to improve its liquidity position and fend off potential downgrades from ratings agencies. This move, however, resulted in shareholder dilution. The company is also laying off 10% of its 177,000-person workforce in a restructuring effort to trim costs.

On Nov. 4, 2024, Boeing reached a settlement with the machinists for a 38% pay raise over four years, a $12,000 ratification bonus, and improved 401k benefits. With nearly 59% of the strikers voting to approve the new contract, the strike officially ended, and production is set to resume in a few weeks.

2. Boeing Has Over $500 Billion of Backlog

While Boeing is often referred to as part of a global duopoly with Airbus SE EADSF, U.S. airlines tend to favor Boeing due to its strong domestic presence and longstanding relationships. However, American Airlines Group Inc.
AAL
continues to place significant orders with Airbus, such as the A321neo.

Boeing holds a dominant position in the U.S. market for commercial aircraft. The post-pandemic travel boom has driven all the major airlines to upgrade their fleets, which means more airplane orders for Boeing. Actually, more than they can handle.

The company is currently managing substantial order backlogs for several major airlines:

• United Airlines Holdings Inc. UAL is waiting on 497 airplanes and has cut its 2024 deliveries by 102 fewer planes.
• Southwest Airlines Co. LUV, which exclusively only flies Boeing 737 planes, is still waiting on the delivery of 432 Boeing 737 Max airplanes.
• Emirates is waiting for 240 planes.
• Delta Air Lines Inc. DAL is willing to wait until 2026 and even 2027 for its first 737 MAX 10 airplane, which they ordered 100 of and were expected to be delivered over four years starting in 2025.

As of the end of September, Boeing had a backlog of 6,197 airplanes, costing just over half a trillion dollars. Unlike many businesses in this uncertain macroeconomic climate, Boeing certainly has no demand problem. It has more business than it can handle. The problem is execution and capacity, definitely not demand.

3. The Big Contract Deals Still Keep Rolling In

On Oct. 1, 2024, Boeing won $8.46 billion of multiple U.S. Department of Defense contracts for the Navy and Air Force. Boeing’s total U.S. defense contracts rose to $34 billion in October 2024, up 40% year-over-year, despite the machinist strikes.

On Nov. 7, 2024, Israel’s Defense Ministry announced a $5.2 billion deal to purchase at least 25 Israeli F-15 fighter jets out of Boeing’s St. Louis facilities.

4. End-of-Year Tax Loss Harvesting is Magnifying the Selling

Every year, tax loss and tax loss harvesting selling takes place from November through December. This involves selling stocks that are underperforming or down for the year to realize capital losses to offset capital gains in your portfolio. While this is commonplace with individual investors, it's the mutual funds and hedge funds that can make a dramatic impact on share prices.

With Boeing stock falling 46.2% YTD compared to the 23.2% gain in the S&P 500 index, there's no doubt funds are divesting Boeing stock. Tax loss selling magnifies the losses. However, the silver lining is that these stocks tend to rally back in January as funds re-enter their positions after the 30-day wash rule. For bullish investors, it pays to buy into the selling for a bounce in January.

5. BA Stock Is Nearing a Powerful Weekly Double-Bottom Support Level

A double bottom is a significant price level where a stock finds a floor and bounces. The bounce eventually exhausts as the stock falls back to the prior bottom to put in another bottom near or at the same level before it stages a higher rally. A double bottom that gets retested and bounces again forms a triple bottom. The wider the time frame chart, the more significant the double bottom levels become.

BA formed a double bottom around the $121 level in May and then October of 2022. While BA stick technically fell as low as $113.00 in June, it’s important to note that the candlestick body remained at or above the $121.00 level every time it fell below. After the second bottom formed sharply at $121.00, BA staged a massive rally to a peak of $267.54 by December 2023.

However, that was the highest peak and the head of a bearish head and shoulders pattern as each bounce peaked at a lower high. The right shoulder peaked at the weekly anchored VWAP at $196.95, literally on the nose, in July 2024. BA stock has accelerated its selling to continue to drive the neckline sharply lower. The weekly RSI has plunged to the oversold 30-band. Fibonacci (Fib) pullback support levels are at the $131.43, $121.00 double bottom, $93.90 and $89.00 pandemic low.

BA’s average consensus price target is $190.37, and its highest analyst price target sits at $250.00. It has 14 analyst Buy ratings, 9 Holds, and 2 Sell Ratings. The stock has a 3.06% short interest.

Bullish investors can consider using cash-secured puts to buy BA at the Fib pullback support levels or consider buying LEAPS at Fib extension levels to capture the upside without deploying the full capital of owning the stock. If the LEAPS are or become deep in the money (ITM), then selling front-month out-of-the-money calls activates a Poor Man’s Covered Call strategy to generate income.

The 1 Reason to Avoid Boeing Stock: Trump Tariffs Could Cripple Boeing’s Margins and Ignite a Trade War

Boeing imports nearly 30% of the parts for its airplanes from international suppliers, which adds up to a lot of parts. Boeing 787, for example, has 2.3 million parts. Boeing even has a factory in China that finalizes painting and interior work before planes are delivered to Chinese airline customers.

During his previous term, President Trump imposed tariffs on various imports, including a 25% tariff on steel and a 10% tariff on aluminum from multiple countries, including the European Union. These measures increased production costs for U.S. manufacturers, including aerospace companies like Boeing, which rely on these materials for aircraft construction.

During his 2024 re-election campaign, Trump proposed a blanket 10% to 20% tariff on all imports and a 60% to 100% tariff on products imported from China. The actual actions are a wait-and-see situation.

The imposition of tariffs led to retaliatory actions from affected countries, resulting in reduced demand for U.S. exports. For instance, Boeing experienced a decline in aircraft deliveries to China, a significant market for the company, following the previous escalation of trade tensions. In 2018, 24% of Boeing's plane deliveries were to China, but from 2019 until December 2023, the company did not make any deliveries to the country.

Analysts have expressed concerns that a renewed trade war with China could be a punishing setback for Boeing, as the company has been eager to resume sales in one of the most lucrative airliner markets in the world.

The reintroduction of tariffs could lead to increased production costs for Boeing due to higher prices for imported materials and potential retaliatory tariffs from other countries. These factors could adversely affect Boeing's competitiveness in the global aerospace market and its financial performance.

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