Boeing is in a transitional phase, but investors didn’t cut it any slack today

Not exactly flying high.
Not exactly flying high.
Image: AP Photo/Ted S. Warren
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Investors weren’t very keen on Boeing’s latest quarter. Even though it beat profit expectations and hit its revenue targets, they still sent the stock down 7.8% today (Jan. 27) and erased $6.8 billion from its market value.

What’s the big fuss? It comes down to about 20 planes, or the difference between the number of planes Boeing delivered last year (762) and the number it expects to deliver this year (742)—chiefly because the company is phasing out its older planes. CFO Greg Smith had this to say about the shift’s impact on deliveries:

This reflects the decrease in 747 deliveries, driven by the market and resulting production rate decision we talked about earlier. It also reflects the 737 transition to the MAX that we continue to build test airplanes and produce units for 2017 delivery upon certification. And we also see lower 767 deliveries as we ramp up on the tanker program, again in preparation for 2017 certification and delivery.

The company’s earnings weren’t all that bad, and it expects big growth in areas like China, where it said airline travel was growing at 15% annually, or more than twice the rate of the country’s GDP growth.

But stock prices are often about expectations, and investors hate when you dash theirs. So while this year’s expected revenue haul is still a hefty $90 billion, that’s a slowdown from 2015’s record $96 billion. And that just won’t do.