The deadly crash of Boeing’s (BA) new 737 Max 8 jet over the weekend is sparking a reaction in a number of stocks Monday.
Boeing’s stock saw the largest move. The crash of the jet operated by Ethiopian Airlines, which left 157 dead, sent shares of Boeing down over 8% and at one point, led to a broader selloff in the Dow Jones Industrial Average (^DJI).
Prior to Monday’s move, Boeing shares were up a staggering 31% so far in 2019, making it a staple of the broader market’s rebound from the December 2018 lows.
Back in late October, a Lion Air 737 Max 8 jet crashed near Indonesia, killing all onboard and sparking a selloff in Boeing’s stock. It remains unclear what caused both crashes.
“The last crash saw a nearly identical [stock] drop take place, followed by the smart money buying up shares on that dip from the panic money, and the stock advancing over 35% since then,” said David Bahnsen, founder & chief investment officer of The Bahnsen Group. “We see [Monday’s] 10-12% drop as the expected panic from a retail base unsure of what to do, and we would be surprised if this doesn’t prove to be a short-lived dip as well.”
Still, the two crashes are a black eye for Boeing, which is doubling down on the 737 Max family, with roughly 4,600 planes on order.
That’s less than the roughly 6,500 units that Airbus has on order from customers for its 737 Max 8 rival, the A320neo.
Airbus impact
Shares of Airbus (EADSY) rose 1% Monday. Airbus is grappling with its own headwinds, as it recently announced the discontinuation of its double-decker jumbo jet the A380 as airlines move away from large gas guzzling jets in favor of smaller fuel-efficient planes like the 737 or the Airbus A320, which is the 737’s main competitor.
But Bahnsen doesn’t see the 737 Max crash having much impact on Airbus’s stock, nor the airline stocks themselves.
“We wouldn’t see this as remotely relevant to Airbus and Airbus is not on our radar,” he said. “It certainly wouldn’t be pertinent to the airlines at large which have proven in spades [that they] are not a monolithic group,” he said. “Rather, each has to be evaluated individually on their own cash flows, growth rates, and balance sheet strength.”
The U.S. airlines which currently operate the 737 Max saw a mixed reaction to its stock prices on Monday. American Airlines (AAL) rose 1%, while United Continental Holdings (UAL) and Southwest Airlines (LUV) declined.
The other major plane maker, Embraer (ERJ), which Boeing bought a majority stake in last year, rose 0.6%.
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Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.
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