We came across a bearish thesis on The Boeing Company (BA) on Substack by Stock Picker’s Corner. In this article, we will summarize the bears’ thesis on BA. The Boeing Company (BA)’s share was trading at $172 as of Jan 10th. BA’s forward P/E was 36.90 according to Yahoo Finance.
A Boeing 737-Next Generation aircraft in flight, highlighting the efficiency of the company’s fleet.
Boeing, once a leader in innovation and a top defense contractor, has fallen from its pedestal in recent years. The company’s legacy includes revolutionary contributions to aviation, such as the B-17 Flying Fortress, the 707 airliner, and the iconic 747 Jumbo Jet. These milestones solidified Boeing’s position as a dominant player in both the military and commercial aviation sectors. However, the company’s recent history has been marred by significant setbacks, including two fatal crashes involving the Boeing 737 MAX-8 in 2018 and 2019, which resulted in the grounding of the aircraft and the loss of 346 lives.
These tragedies triggered a series of investigations that exposed deeper, systemic issues within Boeing, from safety lapses to labor conflicts and a deteriorating corporate culture. The aftermath revealed that the company’s once-proud legacy of innovation had been replaced by a focus on cost-cutting and operational mismanagement. Boeing’s financial struggles were compounded by the suspension of its dividend in March 2020, following both the pandemic and the 737 MAX crisis. Since then, the company has yet to recover its prior profitability, with its last profitable year being 2018, when it posted net income of $10.45 billion. Furthermore, Boeing continues to grapple with supply chain disruptions and the lasting effects of a seven-week strike in 2024, which cost the company an additional $10 billion.
Despite these challenges, the long-term outlook for Boeing remains cautiously optimistic, particularly in the air travel and cargo sectors, which continue to show growth. The 737, in particular, is expected to benefit from this expanding demand. However, Boeing’s transition from a culture of innovation to one dominated by “professional managers” and “bean counters” has led to a loss of its competitive edge. The company now faces the difficult task of turning around its operations and restoring its reputation as a leader in aviation technology.
For investors, Boeing is no longer the sure bet it once was. The company has shifted from a growth stock to a turnaround play, and while there are reasons for cautious optimism, more concrete evidence of a successful recovery is needed before the stock becomes an attractive investment again. The once-vibrant spirit of innovation that defined Boeing’s success is now a distant memory, leaving behind a company that must prove it can once again build truly great airplanes.
The Boeing Company (BA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held BA at the end of the third quarter which was 42 in the previous quarter. While we acknowledge the risk and potential of BA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.