Boeing Stock Plummets After FAA Grounds 737 Max 9 Jets
On Monday, Boeing stock (BA) tumbled more than 8% in morning trading after the Federal Aviation Administration (FAA) ordered the temporary grounding of some Boeing 737 Max 9 jets. The planes in question were fitted with a door plug that flew off an Alaskan Airlines plane midair on Friday. The FAA’s order will impact 171 planes.
Previous Incidents
Friday’s incident isn’t the first time the 737 Max has been under scrutiny. In 2018 and 2019, two fatal crashes occurred that killed all 346 passengers and crew on board, leading to a 20-month grounding of planes as safety changes were made.
The event last week caught significant attention online and set up Boeing’s stock for its worst single-day fall in more than three years, according to Bespoke Investment Group. Shares of Spirit AeroSystems (SPR), which makes the fuselage for Boeing’s 737 Max jets, also tanked on the news, falling more than 13% at the open.
Analysts’ View
Despite the stock’s plunge, some Wall Street analysts believe the event last week won’t have a long-term negative impact on the stock. RBC Capital Markets analyst Ken Herbert wrote in a note to clients, “This accident does not alter our positive view on [Boeing]. We think investing in BA requires thick skin, and headline risk is substantial, but initial indications are that this is an isolated incident, and the financial risk to the MAX is not thesis changing.”
Prior to Monday’s drop, Boeing stock had been up more than 20% over the last year. While the FAA’s order has caused a significant dip in the stock, analysts remain optimistic that the incident will not have a lasting effect.