Boeing Loses Altitude (Again)

If you’re an investor in airlines or airplane manufacturers, this is not the type of headline you want to wake up to. Unfortunately for Boeing and several others, the news is not great. So let’s dig into it. πŸ‘‡

Saturday afternoon, the passengers of an Alaskan Airlines flight saw a door plug blow out of the middle of their nearly brand-new aircraft when it was flying at around 16,000 feet. The incident injured several passengers and blew many objects out, forcing an emergency landing.Β 

The Federal Aviation Administration (FAA) has since ordered airlines to ground dozens of Boeing 737 Max 9 aircraft for urgent inspections. While that’s a key step to resuming flights, it’s unclear how widespread of an issue this is and how long it’ll take to be fixed and approved by regulators to resume flying. πŸ›‘

Boeing has been under FAA scrutiny since 2018 and 2019, when its 737 Max planes were involved in fatal crashes. Recently, the stock has recovered due to a lack of incidents and the feeling that the company was heading in the right direction. However, its plans to ramp up output of the Max are likely on hold now until this is resolved. πŸ•΅οΈβ€β™‚οΈ

Around 171 planes are impacted by its emergency airworthiness directive, with Alaska Airlines and United Airlines impacted most as the largest operators of the 737 Max 9 model. United already found loose bolts during its 737 Max 9 fleet inspections but won’t say how many were impacted. 😬

Spirit AeroSystems, which makes fuselages for the 737 Max, also fell sharply on the news.

Besides putting Boeing back in the spotlight, critics also question the airline and regulators over their judgment. The Boeing plane involved in the incident had been prevented from making long-haul flights over water due to pressurization warnings in the days before Friday’s incident. Some say more should have been done than simply shortening the flight length. ⚠️

In the days and weeks ahead, the airlines, manufacturers, and regulators will work together to identify what happened and how to move forward. That leaves a lot of unknown risks for investors in the related companies, likely increasing volatility in their shares for the foreseeable future.

As for any winners coming out of this situation, Boeing’s competitor, Airbus, is a primary benefactor. Apple may also be one, given two of the iPhones that fell 16,000 feet out of the plane were intact and working on the ground. How’s that for durability?

All kidding aside, we’ll keep a close eye on this story and continue to update you as it develops. πŸ‘€

PayPal Pops Ahead Of Key Event

It’s been a rough few years for payment giant PayPal, with shares falling 85% peak-to-trough. Recently, the stock has begun to rebound with other beaten-down tech names but remains about 80% below all-time highs. In other words, it would need to nearly 5x its share price to reach those levels again. πŸ“ˆ

While that may seem a ways off, investors have recently pushed shares to their best three-day run since the end of 2022. That’s because the company promised to roll out new “customer-backed innovation” at an event next Thursday, with its new CEO Alex Chriss saying, “It is very clear what we need to do.”

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Epic Wins A “Victory Royale” Against Google

It’s been three years since Fornite-maker Epic Games sued Apple and Google for allegedly running illegal app store monopolies. And despite losing a similar battle against Apple, the game-maker has secured a win against Google. πŸ†

The jury in Epic v. Google delivered its unanimous decision after just a few hours of deliberation. They found a few key things:

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Apple Drains EV Resources For AI

After ten years of research and development, Tim Apple is finally pulling the plug on Apple’s electric vehicle (EV) project. Because as we all know, EVs have lost their luster and given way to the business world’s new savior…artificial intelligence (AI). πŸ˜‡

Bloomberg broke the news today, saying the tech giant disclosed the strategy shift internally and surprised the nearly 2,000 employees working on the project. Executives told staffers the project would begin winding down and that many of the car team’s employees would be shifted to its artificial intelligence division, focused on generative AI.Β 

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Investors Are Losing Trust

It’s been a rough eighteen months or so for real estate investment trusts (REITs), with higher interest rates giving investors alternative sources of yield and pressuring commercial real estate’s asset values. Unfortunately for Medical Properties Trust (MPT), that pain continuesΒ today, with its shares falling back to their Great-Financial-Crisis lows. 😬

The medical-related real estate property operator revealed to investors that one of its tenants, Steward Health Care System, is roughly $50 million behind in rent payments. As a result, MPT will take a $225 million noncash charge to write off rent receivables and other items.Β 

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