A US Air Force Boeing C-5 Galaxy takes off from José Aponte de la Torre Airport, formerly Roosevelt Roads Naval Station, on September 13, 2025 in Ceiba, Puerto Rico. (Photo by Miguel J. Rodriguez Carrillo / AFP) (Photo by MIGUEL J. RODRIGUEZ CARRILLO/AFP via Getty Images)
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Boeing (NYSE:BA) has declined nearly 5% in the last month as investors consider ongoing delays in certification and continual pressures on cash flow in relation to its rebound in deliveries. The company acknowledged that the timeline for the 777X certification is falling behind again, which raises alarms about potential revenue delays; the FAA has not yet authorized an increase in production rates for the 737 MAX, constraining sales growth in the short term; and an expensive defense labor strike, now linked to a tentative agreement featuring 45% wage increases over five years, further complicates margin pressures. Coupled with supply chain challenges and rising costs, these factors intensify uncertainty surrounding Boeing’s earnings and recovery in cash flows, which has contributed to the recent decline in the stock price.
The pressing question for many investors is: could Boeing stock experience a significant drop from its current levels — potentially falling back toward $100-$120, which is about half of its recent highs? Let’s explore how that scenario could unfold. If you’re looking for a way to benefit with less volatility than investing in a single stock, consider the High Quality Portfolio. It has consistently outperformed its benchmark, which is a combination of the S&P 500, Russell, and S&P MidCap indexes, achieving returns that have surpassed 91% since its inception. Additionally, see – Can gold prices rally 20% more?
Core Bear Thesis: The Path Back Toward $100-$110
Revenue Headwinds & Valuation Contraction
Boeing is currently trading around $220, which gives it an equity value of approximately $166 billion. However, the calculations indicate that the stock could potentially drop by 50% if the fundamentals do not improve. The company reported $67 billion in revenue for 2024 with a negative free cash flow of roughly $14 billion, and even optimistic projections for 2025 suggest free cash flow will only reach $5–6 billion. At its current price, Boeing is valued at almost 22–25 times forward free cash flow, which is high for a manufacturer still facing production issues, ongoing losses in its 737 and 787 lines, and substantial net debt exceeding $45 billion. If deliveries fall short and free cash flow settles closer to $3 billion, while the market corrects the valuation to a more realistic 10–12 times multiple (similar to competitors like Airbus), Boeing’s equity value could shrink to $30–36 billion, suggesting a stock price in the $100–110 range—approximately half of where it stands now.
Key Bearish Drivers
- Regulatory & Certification Delays: The 777-9 and other wide-body programs still have certification tasks ahead, which are costly both in terms of time and capital.
- Rising Production / Quality Costs: Historically, safety and quality reworks have been a burden; increases in defects or reworks will escalate margin pressures.
- Free Cash Flow & Debt Burden: Although some improvements are apparent (e.g., a narrowing of free cash flow losses like Q2 at ~ -$200 million), Boeing still carries significant debt and needs to continue making hefty investments in certification, tooling, safety, etc. Any disruption in cash flow could strain the balance sheet.
- Demand Risks: A slowdown in the macroeconomy, airline bankruptcies, fluctuations in fuel costs, regulatory constraints, or geopolitical risks (such as trade wars and export restrictions) could hinder order momentum or postpone deliveries.
- Labor/Supply Chain Risks: Issues related to union contracts, wage inflation, and supply chain disruptions that delay parts or affect quality remain concerns.
Offsets & Bullish Hopes
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- Improved deliveries (150 in Q2 compared to 92 year-over-year) indicate Boeing is scaling its operations.
- Revenues that exceed expectations, decreasing losses, and improved safety and quality metrics contribute to rebuilding investor confidence.
- A robust backlog (order book near ~$520-600+ billion) offers visibility into potential future revenues.
The Verdict
Currently, Boeing is trading based on a narrative of hope and execution: the expectation that delivery increases, cost management, regulatory advancements, and improvements in safety and quality will persist. However, the risks remain tangible. Should any of these elements fail— delays in deliveries, certification challenges, cost overruns, or weakening demand—the possible losses could be significant.
A share price drop toward $100-$110 appears feasible in a bearish scenario, particularly if losses linger, cash flow remains negative, and valuation multiples shrink due to risk aversion. This situation might indicate the market recalibrating its expectations: anticipating less growth, increased caution, and a larger discount for risk. For investors, Boeing is still viewed as a high-conviction opportunity: the upside could be considerable if all goes well, but the potential downside is also significant if any aspect of the “recovery” narrative unravels.
Investors should brace for considerable volatility and the risk of substantial losses if market conditions decline or if the company struggles to fulfill its ambitious growth objectives. Although the potential for a 2x upside is mathematically feasible based on forecasted revenues, it necessitates flawless execution in a fast-changing and competitive environment. Now, we apply a risk assessment framework while constructing the Trefis High Quality (HQ) Portfolio, which, with a collection of 30 stocks, has a record of comfortably outperforming the S&P 500 over the last four years. Why is this the case? On average, HQ Portfolio stocks have generated better returns with lower risk compared to the benchmark index; they have provided a more stable ride, as shown in HQ Portfolio performance metrics.