Boeing Pisses Off Investors with $10bln Stock Raise Considerations (Dilution, Dilution Everywhere)

Welp, Boeing is back in the headlines, but not for the reasons you'd hope. Rather than celebrating a new aircraft launch or a miraculous turnaround, the aerospace giant is reportedly considering raising a cool $10 billion by selling new stock. 

(Source: Bloomberg News) 

Why? Well because as we all know, Boeing’s 2024 has been an absolute sh^t show of failures. And now, with a dreadful strike that continues to drag on while SpaceX just shoved Boeing's reputation where the sun don’t shine (aka SpaceX has saved the stranded astronauts) - Boeing's cash reserves are looking thinner than a Spirit Airline seat. 

(Source: Reuters) 

In short, 33,000 machinists are currently on strike, and Boeing has been feeling the burn in more ways than one. The strike, not surprisingly, is over pay and it's eating into Boeing’s already depleted stash of cash. But, but, but… before rushing into it, the company wants to get a full picture of how bad things are before they make any moves. Spoiler: It’s bad. 

(Source: Giphy) 

The reason for the cautious approach is that the company figures that issuing new stock isn’t exactly a great look when they are already down 41.7% on the year (while the S&P 500 has gained 20.8% during the same time). And they aren’t wrong. 

However, despite the hesitation to pull the trigger (even though they need to), the market hasn’t taken this news too well. Boeing’s stock dipped 2.6% in premarket trading after the news broke as investors realized a stock offering of this size is about as dilutive as adding a gallon of water to Wall Street's favorite overpriced cocktail. More shares mean each existing share is worth a little less, and if you’ve been holding onto Boeing stock through all the recent turbulence, this isn’t exactly the in-flight snack you’ve been hoping for.

(Source: Benzinga)

For this reason, before the capital raise kicks off in about a month from now, Boeing is scrambling around to sweeten the deal for its striking workers. They recently dangled a 30% pay bump over four years, along with better retirement benefits. But the machinists weren’t buying it, calling the offer “thrown at us” without proper negotiations. In other words, Boeing’s “best and final” offer was basically horse sh*t. 

(Source: Giphy) 

Additionally, while Boeing's “offer they can’t refuse” was actually refused, Moodys, Fitch, and S&P Global are about to swing the hammer on Boeing's credit rating. Because apparently, Boeing's $45 billion debt pile (that continues to loom larger by the day), looks absolutely atrocious when you don’t have the cash reserves to pay ‘em back. 

(Source: Fitch Ratings) 

Which means, a downgrade would make that debt even more expensive to service, and it would shut Boeing out of the investment-grade bond market, cutting off access to a pool of investors that includes pension funds. So clearly, Boeing, amidst all of its 2024 embarrassments is now faced with another dramatic two choices. Raise cash and piss off investors, or hold out to appease the strikers and piss off creditors, which will then piss off investors. No pressure, no pressure at all. 

(Source: Giphy) 

In the end, Boeing has made headlines in a not so good way again, and as usual, we’re all left waiting to see how bad it’s going to get. Either way,  it’s clear that Boeing is still facing some horrific headwinds, and this latest strike isn’t doing them any favors whatsoever. 

In the meantime, if you’re a Boeing investor this morning, my condolences go out to you. If you aren’t a Boeing investor… rejoice in the fact that you passed on this clusterf***k of a company. And as always, stay safe and stay frosty, friends! Until next time… 

P.S. Whadda beauty! Our alert last week definitely proved itself worthy as $MNPR ripped to a peak of +71% in less than four days! But, but but… that was last week. This week though? Oh baby, our screeners are flashing green on one little known stock... and by the looks of it, we might have another $LFLY on our hands (ICYMI, $LFLY rocketed 142% in less than 25 minutes). Meaning, if you haven't done so yet, I highly suggest upgrading to premium before things get crazy once we drop our newest trade alert! Don't say I didn't warn ya…

Stocks.News holds no positions in companies mentioned in the article.