In early February, aerospace juggernaut Boeing Co. (NYSE:BA) announced it had found yet another software problem on the 737 max, according to the U.S. Federal Aviation Administration (FAA). This comes as the company’s stock price continues to reel from groundings applied to its aircraft related to two high profile crashes in 2019 linked to faulty software and improper or inadequate pilot training.
I’ve long touted the strength of Boeing’s order backlog as a key strength investors could bank on for long-term earnings growth, with the only real limiting factor to bottom and top line growth being operational efficiency.
Now, it seems, Boeing has gone from a position of not being able to produce planes fast enough to a place where the company has already been forced to announce layoffs, with the potential for additional similar problems relating to layoffs and line closures likely in the near to medium term.
While airplane manufacturing does account for a sizable chunk of Boeing’s revenue, it should be noted that this is a well-diversified company, with operations across various sectors, such as defense, for example.
While I do believe the 737 max issues will eventually blow over, it looks like more downside may be ahead for investors looking for a good entry point on this stock.
I would encourage investors interested in buying and holding a long-term position in Boeing to consider adding on dips in the near-term, as they materialize, given this stock is unlikely to get substantially cheaper, barring some sort of serious economic event.
Invest wisely, my friends.
