Boeing stock price rallies as investors breathe a sigh of relief

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His… read more.
on Apr 29, 2020
  • Boeing reports a loss of $1.70 per share, worse than $1.61 per share expected from the Wall Street
  • Revenue came in at $16.91, compared to $17.33 billion expected from the market
  • Boeing has to cut around 16,000 jobs or 10% of the total workforce
  • Shares of Boeing surge 6% higher in premarket trading

Shares of Boeing (NYSE:BA) have rallied around 6% higher in the premarket trading session after the embattled airline giant announced a better-than-expected free cash flow and investors  appeared to breathe a sigh of relief that the results weren’t worse. 

Fundamental analysis: A mixed Q1 report

Boeing stock price surged higher despite the wider-than-expected loss and crashing revenues. The airline giant posted a quarterly loss of $641 million or $1.70 per share, higher than $1.61 expected from the market analysts.

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“As the pandemic continues to reduce airline passenger traffic, Boeing sees significant impact on the demand for new commercial airplanes and services, with airlines delaying purchases for new jets, slowing delivery schedules and deferring elective maintenance,” the company said in a statement. 

Revenue came in at $16.91 billion, again lower than $17.30 billion expected from the market, and a decrease by 26% compared to the same period a year ago. As a result, Boeing will cut around 10% of its workforce, which translates into around 16,000 people losing their jobs.

“We’ll have to make even deeper reductions in areas that are most exposed to the condition of our commercial customers — more than 15% across our commercial airplanes and services businesses, as well as our corporate functions,” CEO Dave Calhoun said in a staff memo.

Boeing said it burned through $4.3 billion in cash during the first quarter as the airline giant struggles in the post math of the 737 Max crisis and the coronavirus outbreak. As a result, the free cash flow turned from $2.29 billion positive to $4.73 billion negative, but still beating the Wall Street expectations of negative $5.79 billion.

Two days ago, Boeing’s CEO Calhoun said to shareholders that he expects two to three years to pass before the demand for air travel can return to levels seen before the COVID-19 outbreak. The company has requested $60 billion in government aid for the company and its supply chain, in addition to a nearly $14 billion loan used recently. 

Invezz recently reported that Boeing stock price is in danger of crashing further lower if the Q1 earnings came in worse-than-expected. Still, investors appeared to breathe a sigh of relief that the results weren’t worse. 

Technical analysis: Boeing stock price surges higher

Shares of Boeing are trading around 6% higher in premarket trading. The stock price is now approaching the $140 mark as it attempts to break the symmetrical triangle and extend the rebound higher. A confluence of the triangle resistance and hourly moving averages will provide an intraday resistance around the $140 handle.  

Boeing stock hourly chart (TradingView)

Looking higher, the next resistance is seen at $150 where the horizontal resistance is located. The buyers will now look to extend the rebound towards the multi-week high at $186. If broken, the $140 resistance line will then revert to acting as a support.

Summary

Shares of Boeing are trading around 6% higher after the company reported lower-than-expected quarterly earnings and revenue, but beat market expectations on the free cash flow.

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