Investors who owned stocks in the last three years have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE:SPY) total return since May 22, 2017 is 61%.
On that day in history, Malaysian carrier Malindo Air flew the world’s first Boeing Co (NYSE:BA) 737 Max commercial flight.
Boeing’s 737 Max Headache: Boeing investors had high hopes for the 737 Max, but it didn’t take long for red flags to appear.
On the day of the first 737 Max flight back in 2017, Boeing shares were trading at around $184.
Boeing shares soared in the first year the 737 Max was in operation, peaking at around $394 in October 2018 — around the time of the first Max crash.
On Oct. 29, 2018, Lion Air flight 610 went down in the Java Sea, killing 189 passengers and crew members. At the time, investors likely saw the crash as an isolated incident. Boeing shares initially dropped back to $296.61 following the crash before ripping back up to an all-time high of $446.01 in early 2019.
On March 10, 2019, Ethiopian Airlines flight 302 crashed, killing another 157 people. Three days later, the U.S. Federal Aviation Administration officially grounded the 737 Max on safety concerns.
Despite the grounding, Boeing shares initially held up relatively well. The stock drifted lower throughout 2019, but stayed above $320 heading into 2020.
Boeing In 2020 And Beyond: Boeing was trading at around $350 in early 2020 prior to the COVID-19 market crash, which sent Boeing shares into a spiral. The stock tumbled all the way to $89, and Boeing announced it was suspending its dividend and share buybacks due to the crisis.
Air travel rates plummeted more than 95%, and Boeing’s customers were forced to cancel orders, significantly shrinking the company’s backlog. On Nov. 18, the FAA finally cleared the 737 Max to fly again, but the pandemic rages on.
The 737 Max era has been a major disappointment for Boeing investors so far. In fact, $1,000 invested in Boeing stock on the day of the first 737 Max commercial flight in 2017 would be worth about $1,240 today, assuming reinvested dividends.
Looking ahead, analysts are expecting more struggles for Boeing in the next 12 months. The average price target among the 23 analysts covering the stock is $174, suggesting 18.9% downside from current levels.