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What Boeing and Shopify Just Said About the Stock Market's Future

By Dan Caplinger – Jul 28, 2021 at 12:29PM

Key Points

  • Markets were mixed on Wednesday morning.
  • Many companies are releasing earnings results.
  • Boeing and Shopify are in very different businesses, but their reports had something to say about the broader economy.

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Markets were mixed on Wednesday as investors parsed through conflicting information.

Stock market investors have had a tough time lately, and Wednesday's moves showed how different readings on the broader global economy are making it hard for investors to interpret what's going on. Amid widespread confusion about how much to worry about a new flare-up of COVID-19 cases and the potential impact on the economic recovery, markets were largely mixed Wednesday morning. As of 11 a.m. EDT, the Dow Jones Industrial Average (^DJI -1.16%) was down 37 points to 35,021. However, the S&P 500 (^GSPC -1.53%) gained 6 points to 4,407, and the Nasdaq Composite (^IXIC -1.66%) moved sharply higher, rising 111 points to 14,772.

On a day packed with corporate earnings releases, a couple of stocks stood out. Boeing (BA 1.85%) represents an old-economy powerhouse that's trying to reinvent itself in a time of massive industry challenges, while Shopify (SHOP -3.04%) has embraced the digital revolution to build a highly successful business in a short period of time. Both companies released earnings on Wednesday morning, and both have insights that investors can use to make broader conclusions about the direction of the economy and the stock market.

Flying higher

Shares of Boeing were up more than 5% on Wednesday morning. The aircraft manufacturer reported strong second-quarter financial results that gave investors some comfort about its ability to adapt to dramatically changing conditions in the aerospace industry.

Boeing 737 aircraft in flight.

Image source: Boeing.

The big surprise from Boeing was that it managed to make money. Net income came in at $567 million, reversing a $2.4 billion loss in the year-earlier period. Adjusted earnings per share of $0.40 were far better than the modest loss most investors were expecting, and it marked the first quarterly profit for the aerospace giant since 2019.

Boeing reported progress on multiple fronts. The return of the 737 MAX aircraft line to service has continued, with more than 130 aircraft delivered since the Federal Aviation Administration and other regulatory bodies across the globe allowed the 737 MAX to fly again. Thirty airlines are using the planes, with more than 218,000 flight hours. In addition, business transformation efforts are proceeding apace, and moves to bolster its defense, space, and global services business have borne some fruit as well.

To be clear, Boeing still faces challenges. The company doesn't expect passenger traffic to return to 2019 levels until 2023 or 2024. Yet Boeing sees airlines making plans for their fleets several years out into the future, and despite short-term challenges, the aircraft manufacturer sees conditions steadily improving. If those trends continue, then they could help Boeing make a full recovery for patient investors willing to wait a while.

E-commerce lifts Shopify

Shopify's second-quarter financial results didn't spur a huge move in its stock price, with shares actually easing lower by less than half a percent. Nevertheless, the e-commerce-enabling platform provider has seen its business continue to perform strongly even as some have figured that emerging from the pandemic would lead to a decrease in online activity.

Shopify's impressive growth rates continued during the quarter. Revenue jumped 57% year over year to $1.12 billion, marking the company's first billion-dollar quarter. Subscription services revenue soared 70% on greater numbers of merchants on the platform, while gross merchandise volume sold by Shopify merchants hit a record $42.2 billion, up 40% from year-ago levels. Even after adjusting for a one-time gain, net income more than doubled from the second quarter of 2020, with adjusted earnings of $2.24 per share comparing favorably to what most Shopify investors had anticipated.

The share-price decline reflects ongoing concerns that e-commerce will see a cyclical downturn once economies fully reopen. Yet having invested so much in digital transformation, most merchants will be reluctant to return fully to a brick-and-mortar model. Hybrid business operations will still require Shopify's clients to use its platform, generating further revenue.

Investors should prepare for some things to go back to their pre-pandemic ways, while others remain changed forever. Both Boeing and Shopify have their respective roles to play going forward, and shareholders can expect a lot from both in the future.

Dan Caplinger owns shares of Boeing and Shopify. The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

Stocks Mentioned

Boeing Stock Quote
Boeing
BA
$186.25 (1.85%) $3.38
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$34,031.16 (-1.16%) $-398.72
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,009.24 (-1.53%) $-62.46
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,271.43 (-1.66%) $-190.06
Shopify Stock Quote
Shopify
SHOP
$41.75 (-3.04%) $-1.31

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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