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boeing raises $21 billion in stock sale

Stock Sale

Boeing’s shares experienced a notable uptick after recent developments generated significant investor interest.

The aerospace giant aimed to raise $19 billion through stock sales and depositary shares, but due to higher-than-expected demand, this figure increased to $21 billion. Boeing initially planned to sell 90 million shares but ultimately offered 112.5 million shares at $143 per share, a 5.1% discount from the previous day’s closing price.

Underwriters may have the option to purchase an additional $750 million worth of depositary shares to cover over-allotments, potentially bringing in another $3.2 billion. However, alongside this positive news, a report from the Department of Defense’s Office of Inspector General revealed significant pricing discrepancies in the costs Boeing charged for C-17 transport plane spare parts. The report found that Boeing overcharged the Air Force by as much as 7,943% for certain parts, including soap dispensers.

The Air Force overpaid by roughly $1 million for a dozen parts, with soap dispensers alone costing $149,072 for an undisclosed number. Wall Street analysts currently have a Moderate Buy consensus rating on Boeing stock, based on 15 Buy ratings, five Hold ratings, and two Sell ratings over the past three months. The stock’s price target of $194.65 per share suggests a 26.79% upside potential from its current level.

Despite ongoing challenges and scrutiny, Boeing’s ability to secure significant funds appears to have bolstered investor confidence, at least for the short term. Investors and analysts will continue to watch how the company manages both its financial health and reputational issues in the near future.

Boeing exceeds capital raise expectations

PJT Partners, Goldman Sachs, and RBC Capital Markets were among the banks that worked with Boeing on this substantial sale, which stands to boost bankers’ profits as year-end compensation draws closer. The sale, which exceeds the $16.5 billion Facebook raised in its record-breaking 2012 IPO, comes during a tough time for Wall Street generally and stands to lift year-end bonuses for equity capital markets bankers, according to compensation expert Alan Johnson. Johnson, who founded Johnson Associates, a consulting group that works on behalf of financial services firms, recently predicted that bonuses for equity capital markets and debt capital markets professionals would be up to the tune of 20% to 25% this year.

Thanks to the Boeing capital raise, he now predicts equity capital markets bonus increases of 30%. The ultimate size of Boeing’s capital raise puts it in league with some of the largest raises ever, according to global equity capital raise data provided by LSEG. It was ranked the third-largest common stock offering globally, according to S&P Capital IQ data reported by Semafor.

For Boeing, the newly raised money comes as the company tries to push through headwinds. It’s faced a rough go this year, reporting a loss of more than $6 billion in its earnings disclosure this month. The company has faced a series of safety concerns tied to issues with doors and mechanical components that have spooked investors.

It’s also struggling as a strike of more than 30,000 workers, which began in September, continues. Its stock is down from a high of more than $251 per share at the start of 2024 to about $155 as of late October, a reduction of about 38%.

Jake Mazzotti

Jake Mazzotti is a visionary male CEO with a track record of leading successful companies to new heights. With his strategic mindset, he navigates complex business landscapes, drives innovation, and inspires teams to achieve exceptional results. In his spare time, Jake loves spending time with his wife and four children.
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