Boeing (BA 0.25%) has spent the better part of the last year trying to rebuild its reputation after a series of engineering mishaps. In January, that challenge became a lot more difficult after the company's 737 MAX was involved in yet another issue.
An Alaska Air Group 737 MAX lost cabin pressure at 16,000 feet after a door plug released. The incident caused part of the global MAX fleet to be grounded.
Beleaguered investors headed for the emergency exits, sending Boeing shares down 19% for the month, according to data provided by S&P Global Market Intelligence.
Boeing can't seem to fly straight
Boeing investors have been on a bumpy ride in recent years. The troubles started with the March 2019 grounding of the 737 MAX following a pair of fatal accidents. The post-crash investigations highlighted quality control issues at the aerospace giant, which were reinforced by subsequent groundings and delays to its 787 Dreamliner and 777X programs.
The pandemic only made things worse, temporarily stunting demand for new aircraft. Boeing during that period grew its debt by nearly 400% to make sure it had the cash it needed to survive, and in recent quarters has been scrambling to increase jet production to generate cash and pay down the debt.
The 737 MAX, which prior to its troubles was expected to be among the top-selling airframes of all time, is back in the skies but can't seem to stay out of the headlines. The early January Alaska Air incident was reportedly caused by issues at Boeing's final assembly plant, putting the company under extra regulatory scrutiny and leading to fresh calls from airline customers for the company to get its act together.
Investors appear to be growing weary of the constant issues, sending Boeing shares downward for the month.
Is Boeing a buy after a turbulent January?
Boeing lost one-fifth of its value in January, but for a while mid-month it was worse. The shares were down nearly 25% for the month prior to the company's late-January earnings release.
Boeing beat on earnings and revenue and generated solid free cash flow for the year. The company suspended its guidance for 2024 due to uncertainty about the 737 MAX investigation, but said it remains on course to hit its longer-term 2025 and 2026 goals. If it does, the stock has the potential to go substantially higher from here.
The issue is that investors have been hearing similarly upbeat assessments from Boeing for a couple of years now, only to see that guidance fall short due to some new, unexpected issue. It's hard to have confidence in what a company expects to accomplish in 2026 when the company isn't even sure what to expect in 2024.
Boeing shares remain significantly below where they were before the company's issues first surfaced nearly five years ago. But until Boeing can demonstrate a few consecutive quarters of drama-free improvement, it's dangerous for investors to climb on board.
