Due to Covid-19, some industries witnessed a booming market and others passed through decreases in value not seen in history.
As we all know Covid-19 boosted Healthcare, manufacturing, technology companies, and many more. On the other hand, some sectors witnessed drops in their activity and businesses, such as tourism, entertainment companies, and mostly the aerospace sector (Figure 1).
Figure 1: Mckinsey Analysis – Economic profit/loss by sector in 2020
That being said Boeing the American-established corporation witnessed one of the worst value declines during Covid-19 since the company was established.
Whereby, the stock price declined from its all-time high of $446/share on the 25th of February 2019, reaching the price of approximately $89/share on 16 March 2020.
This drop is estimated to be a -400% decrease in the value of the stock, which is not normal in wall street activity. Rarely do companies come back from such drops in value.
However, when the vaccination phase started the sectors that bled much due to lockdowns, started to recover again, whereby Boeing climbed its way back towards approximately $280/share.
Then 2 main factors stood facing the thrive of Boeing, were the Russian-Ukrainian geopolitical turbulences, and the skyrocketing oil prices that pushed costs to alarming highs for the company.
Currently, the price is roaming at the $133/share level, however, the head of the largest aircraft leasing company Aengus Kelly said at the Airline Economics conference that the company might recover faster than expected. “I think Boeing will bounce back.
There are a few scenes in this movie to be played out yet, Clearly, Boeing has got its own issues, but Boeing is a tremendous company that’s helped build the world for the last 100 years and I would never write them off, they still build great airplanes,”
Currently, (Figure 2) the price is re-entering a strong previously tested demand zone. Somehow, we can see a potential formation of a head and shoulders, however, this formation is still not completed.
Figure 2: TradingView, Boeing Stock Price 2011-2022
On the other hand, the price is being squeezed between the downward trend and the demand zone, which shows that the price will eventually direct itself in a strong trend. What might also support the price is the current 200SMA which is currently being tested for the 7th time on the monthly timeframe since the company got listed.
The price was never able to break below the 200SMA and create a trend below it, which shows that the possibility of an increase is higher, only in case the price does the same movement it did historically.
On the other hand, the monetary policy is also squeezing the U.S.-based companies, pushing them downwards.
In conclusion, Boeing is facing multiple challenges, whether from the recovery from Covid, increase in oil prices, inflation rates that are also affecting manufacturing, war in Ukraine, and monetary policy challenges.
The question is, will the company with its great 100 years of infrastructure be able to handle all those challenges?
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