- Reports of possible production changes and the official announcement sent shares tumbling and erased as much as $11 billion in market value.
- Boeing's stock has been dragged down by the 737 Max disaster since March, when the plane was grounded.
- Watch Boeing trade live on Markets Insider.
ADVERTISEMENT
Boeing sees $11 billion of market value erased in just 2 days as its 737 Max disaster worsens (BA)
Boeing announced Monday that it would halt production of the beleaguered 737 Max .
Boeing 737 Max Boeing Field
ADVERTISEMENT
Recommended articles
Boeing 's 737 Max disaster is far from over, and it's putting the company's shares under increasing pressure.
Over the last two days alone, the company has seen $11 billion of market value wiped away as it decided how to proceed with the production of the 737 Max airplane, which has been grounded since March after two fatal crashes killed 346 people in the span of five months.
On Monday, shares ended the day 4.3% lower on news that the aerospace company was considering cutting or stopping production of its 737 Max airplanes. That dip erased $8.3 billion from Boeing's market value.
ADVERTISEMENT
Then, shares declined more than 2% early Tuesday after the company confirmed that it would suspend production of the beleaguered airplane in January, putting the company on track to lose an additional $2.5 billion in market value.
Since the Ethiopian Airlines crash in March, the second associated with the 737 Max, Boeing shares have fallen roughly 23%, erasing nearly $55 billion from the company's market capitalization.
There were some signs of a recovery in Boeing shares as the company remained optimistic that the airplane could return to service. Earlier in the year, Boeing had anticipated that the 737 Max would be cleared to fly again by the end of 2019, a timeline that the Federal Aviation Administration later called "not realistic."
Now, the plane's return to service is unclear. The move to halt production of the airplane "is clearly a good one on paper for mitigating financial risk, but it's the operational risk on the turning the system back on that is now incremental," wrote Myles Walton of UBS in a Monday note. He reiterated his neutral rating on shares and price target of $370.
For investors in Boeing, issues with the 737 Max means that a dividend increase in 2020 is unlikely, according to analysts led by Ronald Epstein at Bank of America.
ADVERTISEMENT
"With no concrete timeline for return to service and with an inventory burn of about $5.5bn for every quarter, there is only so much that the Boeing balance sheet can sustain," Epstein wrote on Monday.
He reiterated his neutral rating and $370 price target Tuesday and said Bank of America would wait for further details from Boeing, due when it reports fourth-quarter earnings in January.
"We have several questions that must be answered before we may fully understand the impact to our financial model," Epstein wrote.
Boeing is up 1.4% year-to-date through Monday's close .
ADVERTISEMENT
See Also:
- Google's former HR boss shared the company's 4 rules for hiring the best employees
- Disappointing photos show what 9 top luxury destinations look like in real life
- An American family who moved to Nicaragua for a year to live cheaply ended up blowing their $30,000 budget thanks to unexpected costs but still spent less than life at home in the US
FOLLOW BUSINESS INSIDER AFRICA
ADVERTISEMENT
Recommended articles
Trends in online casino gaming in New Zealand
10 African countries with the highest number of migrants
PHOTOS: Inside the hostel in Rwanda set to house migrants from the UK in July
10 African countries with the weakest governments
Zap unveils Africa's first non-custodial exchange
The future of healthcare on display: Day 1 of Medlab West Africa wraps up
Nigeria suspends a Chinese business over discrimination charges
10 African countries with the greatest soft power influence over the world in 2024
