Today, the stock of Boeing Co. took another beating after more than $25 billion (19 billion pounds) were knocked off from the market value of the planemaker over the last two days. It comes as more countries lined up to decide to ground its 737 MAX 8 aircraft after the deadly crash in Ethiopia that happened last Sunday.
The United Kingdom joined Malaysia, China, Australia, Singapore, and many other countries in imposing a ban on the 737 MAX planes, negatively affecting the shares, which had been considered as one of the best-performing stocks so far in 2019 on the Dow Jones Industrial Average.
The shares of Boeing have delivered a total return – including reinvested dividends – amounting to almost four times the performance of the full index since the stocks of the United States started rebounding from the 2007-2009 financial crisis.
Today, the stock dropped by 7 percent to $372 in midday trade. It added to a 5 percent slump last Monday. The losses set the stock for its largest two-day percentage drop since June 2009.
The shares of U.S. airlines were noted to be broadly lower in midday trade, with the S&P 1500 airlines index off by 1.5 percent. American Airlines Group Inc and Southwest Airlines Co., which analysts said were among the airlines in the United States that are most exposed to the Boeing aircraft model at issue, saw their shares plunge by more than 2 percent.
According to data from Refinitiv, at least seven of the 24 analysts that are covering the said stock have reviewed their ratings over the past two days, with one price target cut and two downgrades so far.
DZ Bank became the first brokerage in a span of almost two years to place a “sell” rating on the stock while setting a price target of $333 – which is considered as the lowest on Wall Street.
Edward Jones, a brokerage, also downgraded the stock to “hold” from “buy.”It said that the accidents could result in extra expenses, some order delays and pressure financial results.
The single-aisle 737, the most-sold commercial aircraft in the world, is central to the future of Boeing. The MAX line is considered as the fastest-selling jetliner in the history of the company with over 5,000 orders booked and a backlog valued at almost $500 billion at list prices.
The United States will require that Boeing implement some design changes by April, however, it said that the plane was airworthy and did not need to be grounded.
Boeing defended its aircraft and said that it has “full confidence in the safety of the Max.”
Some safety experts say that it is too early to speculate on what caused the crash last Sunday and black box recorders were yet to yield the cause.