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Boeing (BA -2%) maintains its long descent, reaching fresh 23-month lows today following a few unfavorable news items. Boeing stated that further negotiations with its machinists union did not make sense at this point, withdrawing its offer. This may have already been priced in, given that BA's increased offer this week was already not received well by the union. Furthermore, the market has potentially been pricing in the current strike, which was kicked off last month after the union voted by an overwhelming majority last month to reject a four-year contract, to last an extended period, possibly through the remainder of 2024.

As such, today's downward price action likely branches more from the other news that broke yesterday shortly after the close.

• The S&P placed Boeing ratings, including its BBB- issuer credit rating, on CreditWatch Negative. The strike underpinned the S&P's decision, noting that as it treks into its fourth week, BA is amid increasing financial risks. S&P estimates an approximately $10.0 bln in cash outflow this year surrounding the strike, requiring BA to likely raise funding to maintain its target cash balance and meet near-term debt obligations.
  • Through Q2, Boeing reported around $7.2 bln in net cash outflow due to lower commercial deliveries and poor working capital timing. Meanwhile, Boeing's total debt balance swelled to $57.9 bln after issuing $10.0 bln in new debt in May.
• This warning prompted today's Reuters article noting that Boeing is weighing routes to raise cash. Given S&P's roughly $10.0 bln cash outflow estimate, Reuters mentioned that a source suggested raising this precise amount.
• Which route Boeing follows has yet to become clear. However, stock dilution, either through common stock offerings or convertible bond and preferred stock offerings, as well as large stock sales, all of which can weigh on the current share price, may be in the cards.

There does not seem to be a shortage of setbacks for Boeing. The company has been the center of numerous scathing headlines this year, from a door plug blowing out and a side panel ripping off during different flights to the FAA finding many non-compliance issues in the company's manufacturing process. Further damaging to its image, Boeing's Starliner has thus far failed to bring two stranded space station astronauts back to Earth.

Now, Boeing is facing a nearly month-long strike, with negotiations paused, leading to a cash crunch and potentially prompting a significant cash raise soon. Given this context, silver linings are essentially a needle in the haystack. Boeing is under new leadership, appointing Kelly Ortberg as CEO two months ago. Perhaps this shakeup will eventually spur sweeping changes. However, at this point, it may take a few uplifting developments before the stock begins to break free from the current bearish sentiment.