What happened
September was a dismal month for stocks, with investors increasingly worried about the potential for a global economic slowdown. Shares of Boeing (BA 0.81%) got hit worse than most, with the shares down 24.4% for the month, according to data provided by S&P Global Market Intelligence.
So what
Boeing investors had a September they'd rather forget, with the stock approaching lows not seen since the early days of the pandemic despite no company-specific news that would suggest a need for that level of panic. Indeed, the problem wasn't Boeing-specific. Rather, Boeing shares got caught up in a broader market sell-off fueled by increasing fears that the economy is headed toward a recession.
Europe is slowing due to the war in Ukraine and the subsequent spike in energy prices, China remains caught up in COVID-19-related shutdowns, and in the U.S. the Federal Reserve continues to aggressively battle inflation. Across the globe there are real threats to discretionary spending, which usually translates into lower demand for travel.
Boeing has a massive order book of more than 4,000 jets, and actually added to that order book in September. But airlines have significant flexibility to defer orders when times are tough, so that backlog won't do much to provide cash inflows if a recession does materialize. And Boeing could use the cash sooner rather than later, after growing its total debt by 400% during the pandemic.
There's no existential threat to Boeing: The company has the wherewithal to survive a slowdown. And over time Boeing's order book should make it a winner. But there is also no obvious catalyst that would allow the company to soar in this environment. In a month when investors by and large saw the glass as half empty, and not half full, Boeing shares were under significant pressure.
Now what
As mentioned above, at their September lows Boeing shares were approaching levels comparable to the early days of the pandemic. Boeing is almost inarguably in better shape today than it was back then, a period when there were significant questions about whether Boeing's airline customers would even survive.
With that in mind, the stock is arguably a bargain today. The issue is the uncertainty about where the economy goes from here. If it is indeed heading toward an extended slowdown, it could take years for Boeing shares to reach previous heights.
Given all of the unknowns, investors in September appeared content to watch from the sidelines instead of buying the dip.
