Going Short for Boeing Still a Reasonable Strategy
Shares of Boeing plunged by 7.55% from $185+ levels to $172 after the legendary aircraft manufacturer failed perform previously planned plane deliveries to China as Beijing's aviation authorities claimed to halt the shipment due to the need of issuing additional certification. The documents are related to the batteries in cockpit voice recorders on all Boeing models, including the 787 and long-suffering 737 Max, which has been thoroughly checked after a series of crash incidents. The industry giant even said it may impact its financials, including potentially negative cash flow in the current quarter.
Chinese market is critical for Boeing. The company also expects that the number of 787 wide-body Dreamliner deliveries would be "similar to those in the first quarter", suggesting "no significant improvement" in the short term. Supply-chain constraints for the 787 model are here as well, while the quarterly margins in the defence segment are expected to be negative.
I've looked into this before, several times since January, and so I feel short selling positioning is still a reasonable strategy for Boeing shares. Any upticks or price rebounds proved to be short-lived over the past few months. Thus, a $125 to $135 target range could be considered as a legitimate objective, as these prices were detected in summer and fall of 2023. Moreover, reaching lows around $150 or maybe $153 to $155 is on the table in early June, as weakening fundamentals are clearly in favour of holding sell positions for longer.
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