This report will be analysing Boeing’s stock for its major events since 2018 and the week commencing 22nd February 2021. Analysis will be done using StockGeist, a platform that determines the sentiment towards a stock in real-time, by applying natural language processing to the latest news updates and social media posts. All times given are in GMT+0.
The Boeing Company is an American multinational corporation that designs, manufactures, and sells aeroplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide. The company also provides leasing and product support services.
Major Event Analysis:
Boeing has been facing many difficulties since the two 737 Max crashes in 2018 and 2019 which killed a total of 346 people. The company is also reported to have lied about the performance of the 737 Max, where business interests override engineering insights. On 7th January 2021, an article on The Verge and later followed by Bloomberg highlights Boeing’s misleading public-relations campaign, where the red flags and design flaws on the 737 Max were ignored. Boeing is fined $2.5bn due to this.
On 20th February 2021, one of the Boeings 777’s engine caught fire mid-flight – causes believe to be ‘metal fatigue’. The aeroplane was forced to do an emergency landing and is grounded for further inspection. Although, the engine was not manufactured by Boeing, it still directed the press and negative light toward the company.
When news on the new Covid variants and the extension of lockdown emerged, the company faced even more challenges and the hope for Boeing to recover soon is dimmed. Ultimately, these negative events are printed on Boeing’s share price. Below are a few examples:
7th January – 9th February: Reports of Boeing lying about 737 Max’s capabilities circulate
From the beginning to the latter stage of this circulation share price dropped from 212.95 on 8th January to 200.34 on 25th January 2021.
Data on informative and emotional messages not available
20th February: Boeing 777 engine caught fire
Immediately following the Boeing 777 engine accident, the share price fluctuates between 217 ~ 210 on 22nd February 2021. Although, it rebounded after, the outlook on Covid combined with the series of unfortunate accidents pushed prices down further to 207.56 as of 23rd February 2021, 6 PM GMT.
RED – where positive% < negative%
Through looking at the live data on informative and emotional messages ahead of the market opening time (14:30 GMT), it is understandable why Boeing’s stock dipped then rebounded on 22nd February 2021, following the news on the Boeing 777’s accident 2 days earlier.
4 hours prior to the market opening time, negative messages took an overwhelming majority of the informative and emotional messages – highlighted in red. This trend reversed as the day progressed, hence why the share price eventually increased again above to opening price.
Accuracy Test – 2021
This accuracy test will examine how Boeing’s stock price reacts with changes in emotional and informative messages on StockGeist. The week commencing 22nd February 2021 is the following week from the Boeing 777 engine damage mid-flight. The press picked up on this and the analysis below concluded that Boeing’s share price was affected by this accident.
Period: week commencing 22.02.2021
Time: 14:00 – 20:00
Through the accuracy test, it can be argued that Boeing’s stock is highly reactive to informative and emotional messages. However, the reactivity is much higher in informative messages than emotional messages. This is likely because Boeing’s operation and success are discrete – producing aeroplanes that fly with no accidents. Therefore, the measurement of Boeing’s performance and the future forecast is much simpler and less affected by human biases.
For positive informative messages, any moment that the positive messages take the majority results in 100% increase in share price for the day, regardless of size. The negative informative messages require needed to take on a much higher proportion to have the same impact – 0.75.
For positive emotional messages, responsiveness lowered to 33-50%. However, negative emotional messages managed to reach a 100% of certainty for falling stock prices if negative messages take the proportion of 0.75. This suggests that the stock price direction is more responsive in negative emotional messages than positive.
In terms of average price change, it can be seen that Boeing’s stock experiences a higher price increase in positive messages than price decrease in negative messages. This means that shareholders react more when the company is doing well.
Boeing’s operation in the last 3 years has definitely damaged its reputation, which is reflected in the stock market. However, the future of this company is depended upon two factors:
- The pandemic
- The aeroplanes
Airlines and aircraft manufacturers are one of the most heavily damaged institutions as a result of the pandemic. Boeing can produce reliable aeroplanes but could still fail if the pandemic lasts long enough. Although, new variants in COVID-19 proves to be a new challenge, success with the vaccine distribution and efficacy put lights at the end of the tunnel for Boeing. Arguably, the company will pick up momentum post pandemic when air travels return to normal.
Regarding aeroplanes and the efficacy of Boeing’s aircraft, this is an internal issue that relies on the ethics and values of the people that hold power in this company. Boeing’s decision to continue operation with the 737 Max despite the knowledge that the aircraft contains design flaws, alongside the recent Boeing 777 accident, all reflect the lack of attention and quality to Boeing’s aircraft. This is something that can change and remain uncertain for the time being.
In short, the world will eventually support air travel and aircraft manufacturers again, the real question is will Boeing be ready by then.