Aviation giant Boeing has successfully raised a total of $21 billion in a capital increase that exceeded its targets. Initially planning to sell 90 million shares, the company offered 112.5 million shares to investors at a price of $143 per share due to strong demand. This price was set at a 5.1% discount from the previous day’s closing price. An additional $750 million in escrow shares is also available for insurers, which could potentially bring in another $3.2 billion. This successful capital increase is particularly significant for balancing Boeing’s challenging financial situation.
Boeing’s capital increase has received positive comments from market experts and Wall Street analysts. The company recently reached a consensus of “Moderate Buy,” receiving 15 “Buy,” five “Hold,” and two “Sell” ratings for its stock performance over the past quarter. Analysts predict a price target of $194.65 per share, indicating a potential rise of 26.79%.
Shadowed by a Defense Department Report
On the other hand, a report from the U.S. Department of Defense’s Inspector General revealed significant price discrepancies in spare parts for Boeing’s C-17 transport aircraft. The report noted that some parts were sold at prices 7,943% higher than they should be. Due to these cost differences, the Air Force overpaid by approximately $1 million, with some items, like soap dispensers, costing as much as $149,072.
Impact on U.S. and Global Markets
The involvement of PJT Partners, Goldman Sachs, and RBC Capital Markets in Boeing’s capital increase indicates that Wall Street is likely to see positive effects, especially regarding year-end compensations. Boeing’s capital increase size has surpassed Facebook’s $16.5 billion IPO in 2012, making it the third-largest common stock offering in this regard. According to Alan Johnson, founder of Johnson Associates, while capital market and debt capital market professionals are expected to receive bonuses of around 20-25% this year, Boeing’s move could contribute to a 30% increase in those bonuses.
Capital Strength Amidst Challenging Times
Boeing’s capital increase stands out in a challenging financial environment. The share price, which was $251 at the beginning of 2024, dropped to $155 by the end of October, a decrease of 38%. While the company’s financial difficulties have negatively affected investor confidence, it seems that Boeing is regaining investor trust with this capital increase.
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