Skip to main content

Boeing -- The truth

 In 2014 Boeing's market cap was $91 billion.  It was the best-known aircraft manufacturer and had an impressive reputation.  The B747 was still selling and the A380 was proving to be an expensive failure.  The aircraft manufacturer was sailing high in the wind.  Then the company decided to change its future and become market-driven.  Share prices that had hovered around $100 rose to $420 in 2019.  A very successful strategy Wall Street and investors were happy as clams.  The word was good until the B737MAX and all the faults occurred.  In 2014, Boeing was sitting on a massive order book and had a great reputation.  All the way to today Boeing's share price is $192.  Nearly double what it was in 2014, market capitalization of $100 billion more or less where it was in 2014.  The BIG difference is its future; the order book is dry, the B737 is still a troubled child and even the 787 is in trouble, and to add to the trouble its reputation among pilots is in tatters.

Despite all that its share price is still nearly twice as high as it was in 2014.  P/E doesn't matter Boeing announced losses for the year.  

The question: if the share price is a representation of potential future earnings why is Boeing's share price still around $192, and its market cap more or less unchanged because let's be honest Boeing's Boeing's future earning potential is in real jeopardy.  But then the market can be strange!

I watched DJT stock price over the past few days, I marvel at a valuation of almost $7 billion for a company that last year had less than half a million users (and declining) earnings of $3.4 million for the first 9 months of the year and losses of $43 million.   The valuation implies Facebook-like growth levels, and the user base (which is the only way to raise revenues) is static, falling slightly.  

Both Boeing and DJT suffer from similar maladies, there is a disconnect between reality and expectation.  The truth is that Boeing needs a major cleanup, and it's not Bob and his buds that are going to execute the change.  The reality of Boeing and its attempt at blaming subcontractors is bogus because it's their name on the plane. As for DJT as soon as Trump liquidates his stake in the company which will happen very soon, since it's all his buddies on the Board, the value of the stock will drop to zero.  The smart money will move first, and the idiots will be left holding the bag.

Comments

Post a Comment

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b)...
Post a Comment
Read more

Spray painting Taylor Swift G650 aircraft (updated)

 First, a bit of paint will not harm anyone.  These climate activities are going to learn two things in the next few days:  (1) Trespassing at an airport is a felony almost anywhere in the world.  That means criminal prosecution.   (2) removing paint from an aircraft is expensive.   So these climate activists are about to find out the reach of the British criminal system and it will not be pleasant, the UK has very strict laws about that, I would be surprised if cleaning the aircraft of all the paint will cost less than $100,000.     I am sure that when they planned (premeditation) this little show they had a very valid logic to doing this.  Tonight, they are probably realizing the depth of their troubles.   I understand that in the UK it's a minimum one-year jail sentence.    Also, good luck travelling with a criminal trespass charge against you.  I am relatively certain that the airline industry will ...
Post a Comment
Read more

Janet Yellen from China supporter to Hawk...

There is rarely serious news in the world these days, it seems that most newspapers are filled with headlines and little else, and then Ms Yellen went to China.  Secretary Yellen has long been known in the Biden administration as the voice of moderation when dealing with China, yet as her trip which concluded yesterday a hawk was born:  She warned the Chinese against dumping goods in the United States.    fighting words! The American administration is very concerned about the lack of Chinese domestic consumption.   Even before the COVID-19 epidemic, there were already the beginning signs of a slowdown, automobile sales were off.   China is facing domestic deflation (a clear sign of collapsing demand) China imports few consumer goods, they import raw materials and intermediary goods.   It seems that the American administration is concerned that the Chinese administration will dump consumer goods abroad to keep its manufacturing machinery ...
Post a Comment
Read more