Why Boeing’s $4.7B Hail Mary Could Ignite The Most Explosive Opportunity This Week

Happy Monday everyone!

I hope everyone had a wonderful weekend full of whatever the hell you guys do on the weekends…

But now, it’s time to get the party started!

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With stocks closing slightly down on Friday, the year to date gains no doubt tell a story of encouragement heading into the second half of the year. (Minus being forced to vote between two boneheads in November)...

(Source: Yahoo Finance) 

But alas, while Nike investors are waking up as the epitome of this famous Michael Jordan meme…

(Source: Complex) 

The big news on the street this morning comes from the annoying fly in the sky… aka Boeing- and why they’ve likely just triggered one of the largest buying frenzies in the market this week.

Now we have a slew of stories coming your way throughout today, but this morning’s issue is the best way to get our greedy juices flowing this AM. 

So without further ado, let’s get to it! 

Why Boeing’s $4.7B Hail Mary Could Ignite The Most Explosive Opportunity This Week 

We all know Boeing has had a rough time lately, with safety issues and legal struggles that have been piling up like dirty laundry for the company. But in a plot twist worthy of this morning's issue, Boeing is now trying to save its bacon by buying (drum roll please)... Spirit AeroSystems (NYSE:SPR) for a cool $4.7 billion. 

(Source: Yahoo Finance) 

Whaaaa? My thoughts exactly. Especially considering the funny part where Spirit was once a side arm of Boeing and now makes parts for their defunct planes. Hilarious. 

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However, while this breaking story follows the same story line of getting back with your ex because you think it’ll solve all your problems (spoiler alert: It won’t), there could be a huge opportunity for investors who know what to look for. 

But first, in the midst of all the bad financial press Boeing has received, including their apparent emotionally unaware CEO, why has Boeing actually decided to follow through with this? 

(Source: Reddit) 

Well, let’s rewind to last January when a door plug on a 737 MAX 9 decided to yeet itself mid-flight, leaving a gaping hole and exposing serious quality control issues. This obviously wasn’t a small hiccup. In fact, it was more like finding out the kitchen of your favorite 5-Star Michelin rated restaurant was infested with rats. Can I get a brotha ewww? 

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Of course, once this happened, Boeing's safety reputation took a nosedive, and the FAA wasn't too pleased either, putting a cap on the production of their best-selling jets.

So in a desperate attempt to patch things up (literally and figuratively), Boeing decided to buy back Spirit AeroSystems, the very company they spun off in 2005. It's kind of like trying to fix a broken vase by gluing it back together, hoping no one notices the cracks. 

Boeing is coughing up $37.25 per share for Spirit, and it's an all-stock deal. So, Spirit's shareholders will now own a piece of Boeing's pie. The deal also means Spirit will be split up, with Airbus grabbing some of its assets for a nominal $1. Yes, you read that right—one measly dollar. 

(Source: Bloomberg) 

Meanwhile, Boeing is left with the parts that make up their planes, and hopefully, a shot at redemption.

Redemption with a company like Spirit that has its own set of problems? Makes sense, especially since they’ve had quality control issues that have directly impacted Boeing's production. Think of it as a buddy who keeps borrowing your car and returning it with a dent. Not exactly the most reliable.

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But, but, but…. Here’s the opportunity my friends:  

While Boeing and Spirit might seem like the "world's worst airline stocks" right now, there’s a twist in the tale. Spirit Aerosytems stock has around 9% of it's shares sold short. Which isn't huge, but compared to Boeings 2%, it's large enough to set the stage for a potential short squeeze - where all those betting against Spirit might have to scramble to buy back shares, driving the price up. (Think everyone and their dog rushing to buy toilet paper during Covid… because you know, a clean a%$ was the answer).

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Now even though the theory is definitely possible, investors can’t escape the fact that Boeing's CEO, Dave Calhoun, is on his way out, and he's only trying to clean up the mess before he leaves. He’s like the substitute teacher who’s just trying to make it to the end of the day without a fist fight breaking out. The Senate has grilled him over Boeing's safety record, and shareholders aren't exactly thrilled with the company's performance.
 

(Source: Economic Times)

The deal with Spirit is part of a broader strategy to shore up Boeing’s safety practices and regain trust. But it's a risky move. 

Boeing is basically betting that bringing Spirit back into the fold will smooth out their production issues and improve quality. However, given both companies' track records, this could be a case of the blind leading the blind.

But as we all know, the market is unpredictable. And the only real possibility that could come of this deal is a dash of excitement and (degenerate humor) that leads to a potential short squeeze on Spirit’s stock.

(Source: Business Insider) 

So as you’re priming up to get into the action of today’s trading session, it might be worth your while to keep an eye on Spirit Aerosystem's stock. Because while Boeing is throwing a $4.7 billion hail mary to patch it’s reputation, the only result that's bound to happen is every Wall Street Bets trader rushing in to ignite another short squeeze… and throw up another big “F U” to Wall Street. 

So with that said, keep your eyes peeled people… things could get very interesting today. 

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Stocks.News holds no positions in the companies mentioned.