Don’t Buy Boeing (BA) ✈ Stock Without Watching This First! πŸ“‰

Back in April, I told you to avoid Boeing
stock, citing it’s risk/reward profile – that there was more risk than there was potential
reward at least in the short term. The stock was down 10% and swing traders were
hopeful. Well, now it’s down another 13% percent
(as of this recording). A lot of people are asking if now is finally
the time to pile back in. After diving deep myself, I think there’s
still some potential for significant downside in the near future… All the details coming up! — Hey there! My name is Stephen Spicer and it’s my goal
to help you invest smarter. If you’d like to learn from a practicing
professional, take a second to hit that subscribe button and notification bell. This week, in our Insider Community, we dove
into Boeing stock. I created for the Insiders this 15-page report
and spreadsheet that dives deep into the analysis and specific strategy that they could use
in order to maximize their returns if they choose to invest in the stock. That was our first deep dive and I really
enjoyed putting together that content. I would love to do more – more than just a
report and a deep dive each week. Those are great, but I want to build out an
even more robust resource for you. I’d love to build out a portfolio with you,
using just the stocks we’re researching together, I’d love to create a beginners
investing course that’s available to everyone inside the community… the list goes on! And as we get more Insiders, you’re going
to see more and more of that come to fruition. I’d love to have you on board to make that
happen. I’m confident that once you’re inside
for a week or two you’ll see the value. In fact, that’s why I want to offer you
2 weeks for just a dollar. You’ll get to experience a couple of those
weekly deep dives and can comfortably make the decision if it’s truly worth the mere
$19/month I’m asking now (as of this recording). If you’re interested at all, go to — Alright, back to Boeing… Much of what we turned up in our analysis,
supports the widely held belief that Boeing is currently undervalued or at least will
be much more valuable over the long term. But there were several things that came up
that might suggest more pain in the near future for the company. One that stood out the most to me and struck
me as concerning I wanted to take a moment to share with you. To best understand the concern, you need to
understand how the airline industry is traditionally valued – the multiple that is used. Because of their heavy cash outlays for research
each time they embark on a new project, their earnings are skewed from year to year. They profit much less (if not negative) per
plane on the front end, right after the research is concluded. But over time, later in the life cycle of
that craft their profit per place significantly higher. To account for this choppiness in earnings,
investors will traditionally use a cash flow from operations multiple – P/CFO – instead
of an earnings multiple – P/E or the like – to determine a fair value. And by that standard, Boeing appears to be
undervalued. It’s price to cash flow from operations
right now is around 13 – which is historically low for the company and significantly lower
less than its competitor, Airbus, who’s multiple is currently approaching 40. Looks good, right? Seems to check out from a value investor perspective. And again, I think long term that will be
the case. But short term, you may find a different story. If not prepared for that it may be more difficult
to control your emotions during those short-term swings making it difficult to even survive
long enough to ultimately realize those long-term gains. I’d like to walk you through this, so you’re
prepared for what I see as a relatively significant negative catalyst that could come to fruition
in the near future. Now that you understand what metric is important
to Wall Street and other investors, it’s easy to understand what metric is important
to management. Boeing has a history of impressing Wall Street
with its cash flow growth. Between 2010 and 2018, Boeing increased its
operating cash flow from $3B to $15.3B, sustaining its share price. They did this by shuffling money around as
much as possible each quarter – negotiating advance payments from customers; delaying
payments to its suppliers – all in the name of making their cash flow numbers look as
strong as possible. An article written on February 9th (before
the second crash) in The Seattle Times interviewed an insider familiar with the strategies being
used. He said that “…financial engineering is
artificially boosting the stock price.” He specifically gave an example of how it
was commonplace that if in one quarter the defense division (for example) was coming
in under its target, it would call the commercial airline division and tell them to find the
excess cash flow somewhere. Also, from that article “…the process
is entirely opaque from the outside because the precise financial terms of jet sales are
never disclosed.” So, it’s difficult for anyone to know the
exact impact all these delays are going to have. The article concludes by saying that this
strategy is sustainable only as long as orders are good and delivery rates are increasing. Who could have known how prescient that article
would turn out to be – that a couple of months later, that is precisely the problem they’re
faced with – an inability to deliver (and cash in on) their planes. With all of this, I think there is one huge
lingering variable that could magnify the downward pressure on the stock. — And that is: how long these planes will be
grounded and undeliverable. Estimates were initially just a few months. Now, some put it at longer than six months. It’s hard to know exactly how long it’s
going to be. Could be a year. Could be longer. That may sound crazy but think about the number
of factors involved with getting these planes recertified and back in the air. It’s was a big deal to ground them. But it’s going to be even harder to put
the toothpaste back in the tube and get them back in the air. So, Boeing has to come up with a solution
…an adequate solution. And then, the government regulators will have
to sign off on that solution. I’d imagine that they will be tested as
much as they possibly can (they can’t afford to mess this up) which may take some time
– bureaucracy isn’t known for moving quickly. Just think about it – think about all the
pressure politicians have from constituents also on themselves just thinking about how
if they approve this and then something bad happens again… I mean, I can’t imagine how bad that would
be for them, for everyone involved. We could go on with how long this might take,
but I think you get the idea. My point is that because of those accounting
shenanigans – that are apparently commonly used in this industry – because of that shifting
of monies, the well is only going to get that much drier the longer this takes. If to have the stellar quarter they had at
the end of last year, they advanced some cash payments that would have otherwise come in
during Q1 of this year, while at the same time, they pushed some expenses into Q1 – by
doing all that, sure, Q4 looked great (a roughly 20% beat), but that put a lot of pressure
on Q1 of this year. And this is conjecture, but I’d imagine
before that ended in March, management was scrambling to make Q1 look as good as possible. And they managed to only miss by about 1%
– pretty good, all things considering. But I would argue that the longer their main
seller remains undeliverable, the pain felt on their bottom line each time they have to
report, is going to be magnified. It’d get harder and harder to call for advanced
payments. And if they already delayed a lot of supplier
payments into this Q2 – so that Q1 didn’t look quite as bad… well, I hope you get
the idea. Each time they have to report, it’s going
to get harder to shuffle things around. And as a result, I would not be surprised
if the damage to the cash flow figures they’ll be reporting turn out to be worse than analysts
were expecting. So, not only after their events will their
news cycle be extremely negative, about how they keep coming in further and further than
expectations. But, on top of all that, you’ll have that
main metric used by investors to value the company – cash flow from operations – that
number will continue to fall, calling for a lower and lower price per share. That 13 multiple from earlier, was based on
the trailing 12 months – so as we lose their good quarters back when all their planes were
being delivered no problem, and we gain a bad quarter… I hope you can see how that could be bad. Again, I’m not suggesting any sort of long-term,
unrecoverable impact here. I’m suggesting that perhaps the reported
cash flow over the next few quarters will be worse than analysts and investors are expecting
(potential negative catalysts each time). In fact, Boeing even withdrew its 2019 outlook
and did not provide any new guidance, so the exact impact of the Boeing 737 MAX is not
known. This makes sense and lends itself to that
story – that they might be scrambling trying to figure out how to make this not look quite
so bad before their next earnings call rolls around! So, if you’re considering a position in
Boeing, I don’t think that’s a bad idea. I just think you need a long-term perspective. But more than that it’s helpful to have
an understanding of some of the short term risks that are involved. Like I said, this was just one of the several
that we went through with the Insider Community when we did our weekly deep dive – this was
one that I thought was particularly important that I haven’t heard anyone else discussing,
so I wanted to share with you. If you appreciate that I hope you leave this
video a like and click subscribe and the notification bell so they don’t miss any investing insights.

44 Replies to “Don’t Buy Boeing (BA) ✈ Stock Without Watching This First! πŸ“‰”

  1. πŸ™Œ Welcome back, Spicer Capital Community! So glad to have you here. I hope you appreciate this brief insight into Boeing. This turned up during my Deep Dive Research for our Insiders – I felt like I should share it with everybody. Hope it helps you!

    If you're interested in getting in on that $1 Trial offer, check it out here:
    I'd sincerely LOVE to you have on board!

  2. You are very diplomatic and I enjoy watching your videos. It is concerning that Boeing uses these accounting practices but it was never known as widely as today. There is a good possibility that for political reasons the 737 MAX line of aircraft will not be recertified in China for a very extended period of time. Enough time infact to launch domestic aircraft into the system or at least make some headway into China's jet engine development. Right now I am fearful of the markets. Had I not followed some big short calls, I might even be more pessimistic. My mid-short term portfolios are losers on average of 12% and I was stop limited out of almost all long trades over the last month. Would love to hear any ideas on safety for the next 36 months or so. Thank you again.

  3. Nice analysis with a different viewpoint. Probably many companies r guilty of trying to embellish their quarterly earnings. I guess when u deliver big ticket products (as opposed to daily items or services), thats mayb more possible. Still the question really is when the 737 max gets back in the air. We'll consider addin more with some additional margin safety around the $328 or below price range for our youtube portfolio

  4. Hey is there anything you would recommend to learn about stocks. I am currently watching many financial youtubers and will soon read the intelligent investor. My second question is what career path would you recommend in the financial world and what actions should I take to achieve that position. (I am very young 15 im trying to get ahead as much as possible in life)

  5. If a stock is down for a good reason, it will probably keep falling farther. If it's just a random fluctuation, then it will probably bounce back very quickly. The inverse is also true.

  6. Great analysis, I agree. I would rather buy Chinese stocks right now than Boeing.

  7. We're in a period where the market doesn't decide its next move, we must be more than cautious in our analysis πŸ˜– very informative video Stephen! Like!

  8. Agreed. Boeing is a long-term buy, but it has too many existing headwinds (no pun intended) at the moment.

  9. How badly has HCLP affected your portfolio? Asking out of curiosity as I came across some of your HCLP videos, I'm not really interested in the stock myself (don't really want to touch stocks in that segment).

  10. Absolute worse case scenario right now, is that Boeing scraps the 737max program. The "old" 737 may have a few years back but can't really compete with A320neo on the long term. It will force Boeing to consider developing a totally new plane. The costs will be huge, and and take years! Also this will force Airbus to also start a new program to replace A320. Since a new plane from Boeing properly would be far more effective than the A320 series. Then there would be a loose/loose scenario for the industry (Boeing/Airbus) With huge amount's of resources and money being thrown into two essentially unnecessary project's. I don't believe neither Airbus og Boeing is interested in this happening. I guess staying out of the industry until, this bump in the road is over. Airbus capacity is full for the next couple of years, and it looks like some investors have fled to them, with stock price inflating. Despite the real risk of Airbus unwillingly being forced into developing a new plane far earlier than they wanted to. And ditto for Boeing. The industry at the moment's have some very scary monsters waiting the closet. I would sit this one out, until this risk have been uncovered.

  11. Great analysis IMO. You provided some better insights than most YouTube content will delve into. I would love to hear your thoughts on Caterpillar. Looking at their fundamentals, I believe it is a solid stock. I’m new to investing, it would be great to see how you go about analyzing their long term outlook! Thanks!

  12. I worked for a large aerospace company and we didn't pay our supplier for 90 days and it was said because Boeing didn't pay us till they delivered the plane. Some of our small suppliers almost went bankrupt waiting to get paid. I worked in receiving and I if I backed out a receipt for parts a week later after they were received and reran the receipt that started the 90 day wait all over again.

  13. Solid video Stephen… I agree with your high level sentiment and continue to believe we'll see a $2_ _ handle on BA in fairly short order. What they did as a company is a travesty and its surprising they haven't been punished harder (be it in the media or via its share price). BA is a no-touch for me at this point. Not so much for what's already happened, but for what 'might' happen. If there's another Boeing airliner crash in the fairly near future, I'd expect people to sell first and ask questions later. Trust is questionable at best and completely lost by many. Β 

    No need to put myself thru the stress of owning BA… Too many other great investment opportunities to focus on.

    BTW… To be crystal clear. I hope we NEVER see another Boeing airplane crash. Or any other airline for that matter. I think that's asking a bit much tho'.

    Cheers my friend!

  14. Boeing is in trouble, dennis the faulty sensor guy drove the company into the ground….The 737 Maxx will never be safe no matter what software they add, it is structurally flawed. The airlines will want their money back, the lawsuits will pile up and yea good luck with the stock.

  15. Great analysis Stephen. Really diving deep into the ugly truths that others are not. Keep up the great work πŸ‘

  16. One very very serious factor is the new777-8/9 is a sales turkey. Airlines are staying away in droves, and a lot of cash was spent on this plane. Existing model 777 was a huge success, but this market has become an A350 playground now – everyone wants this plane.

  17. Nothing to say about the 300+ foreigners they killed and how they try to blame the dead pilot? I'm sure if the dead people were Americans their stock would of been significantly lower.

  18. Boeing will recover. Once it does, these prices will skyrocket to make up for the "jet lag" This is a great tragedy that so many lives were lost. My heart mourns for all their lives. I realize that it could have been me boarding those planes. However, where is Boeing going? No where. Before, the government let's an airline fail, they will spend trillions to save it. The worse that will happen is that Boeing will become a cargo plane. They already build cargo planes used by all the major corps:UPS, Fed Ex and now Amazon. That stock will prob not drop much lower (unless there is a repeat of 1929 or 2008) but I highly doubt it will drop too much lower. If Boeing drops considerably there will be a repeat of 1929 or 2008 due to it's weight on the market.

  19. Good call on this haha! Betting against Boeing in the short or long is just stupid. Airbus and Boeing own 95% of the commercial air market and it would be almost impossible for Boeing to fail. You also said you wouldn't buy Tesla which is stupid. Ill be back after the q2 Model 3 sales come out in a few weeks.

  20. Boeing has one of the best trackrecords for flying. Also they are coming out with the new dream airliner that's supposed to really save on fuel. I'm buying while it's down!

  21. I could not find anything in investing in a Roth IRA and what’s the best to buy and hold for longer terms etc….. I’m getting a lot of people saying mutual funds and others saying stocks and others saying index funds and kinda feeling it out. Done some research and finding good and bad for all. Did you do a video on it? Can’t seem to find it if you did.

  22. Hi Stephen, I hope you're keeping well since your last video 3weeks ago. QQ: Is the $1 trial still ongoing? I'd love to try your insider group When's f possible. When I try to sign up it shows $19 per month, but actually it wants to charge $23, a bit confused here, thanks!

  23. A pure idiot spincer capitol, since Boeing is moving the DOW , best aircraft in the world. If you believe this fool , then fly Airbus, a/k/a the flying coffin . Investment advisors are notorious liars when their own profits are concerned . For example, there exist no advice from any Fake-News network warning the public to avoid ENRON , in fact , just the opposite occurred . When the financial crisis of 2008 occured , all financial advisors showed up in their golf cloths to an emergency meeting about the crisis. What a joke these idiot are . Nero fiddled while Rome burned and Wall Street plays golf , while their investors money burned. That's a fact.


  25. 365.33 USD +6.33 (1.76%)

    Closed: Jul 12, 7:48 PM EDT Β· BOEING what's this guy talking about? Maybe he should play less golf and start studying . Buy Li not Au , because of all the forthcoming Li battery orders for all the new aircraft orders from Boeing by Vietnam for $15.7 billion

  26. How’s it been Stephen. Hope all is well with you and hope you are in a healthy state. I can’t wait to hear back from you and see more videos from you. Miss your content.

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