Boeing stock drops sharply after Alaska Airlines incident

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Boeing share price trades around 8% lower in pre-open on the IG platform.

Source: Bloomberg

 

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 Chris Beauchamp | Chief Market Analyst, London | Publication date: Monday 08 January 2024 12:09

Boeing stock drops sharply after Alaska Airlines incident

Boeing Co (All Sessions)’s attempts to put its best foot forward in 2024 have been dealt a blow by the incident in Alaska, sending the shares lower on the IG platform this morning.

Boeing's recent stock drop and setbacks are undoubtedly concerning for the company. The blowout incident with an Alaska Airlines plane has once again raised regulatory scrutiny on Boeing, just as it was seeking approval for new models of its Max jet. This has resulted in a 7.7% drop in Boeing's stock on the IG platform.

The timing of these setbacks is critical for Boeing, as it is trying to catch up with its competitor Airbus, which has gained market share following the issues with the Max airliners in previous years. The delays in aircraft production will not only impact Boeing's financial position but also undermine its new strategy.

Moreover, the Alaska incident will likely hinder Boeing's efforts to enter the Chinese market, which has already been strained due to trade tensions. This setback will further delay Boeing's return to profitability, with net income expected to remain negative despite a rebound from the poor performance in 2022.

Although Boeing's Q3 revenue of $18.1 billion showed a 13% year-on-year increase, driven by growth in commercial airplanes and global services segments, there were challenges in commercial airplane deliveries, which declined by 6% compared to the previous year. The company also lowered its 2023 delivery outlook due to fuselage-related production issues.

Boeing's core operating margin improved in Q3, standing at -6.6% compared to -19.2% in the prior-year quarter. However, the adjusted loss per share narrowed from the previous year, indicating some progress in mitigating losses.

Boeing share price technical analysis

Even before the Alaska Airlines incident, the Boeing share price had dropped by around 7% from its 2 ¾ year December $267.54 high to last week’s $243.0 low.

Boeing Weekly Candlestick Chart

Source: Tradingview

The steep October-to-January uptrend line had already been breached before the incident happened with the 50% retracement of the advance seen since then and the 55-day simple moving average (SMA) at $221.90 to $221.84 representing possible downside targets.

More significant potential support can be found along the 200-day simple moving average (SMA) at $213.77 and 61.8% Fibonacci retracement at $211.11.

Boeing Daily Candlestick Chart

Source: Tradingview

Potential resistance can be found at last week’s low at $243.00 which represents the top of this week’s price gap.

 

 

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