Boeing’s share price is up 8.76% on the day after the Saudi Sovereign Wealth Fund went on a bargain-hunting spree over the weekend, snapping up stocks of major American companies. Regulatory filings indicate that the Saudi Public Investment Fund has acquired a $714 million stake in the troubled airline, in a move that was hailed by the company’s investors. This represents the first bit of good news investors have heard in a while.
A 95% slump in passenger air travel due to the coronavirus pandemic has severely impacted airline stocks, and Boeing’s share price has fallen nearly 71% since March 2019 following the crash of the 737 Max belonging to Ethiopian Airlines.
Despite the slump, Boeing continues to retain long-term prospects, which come from its numerous defense contracts around the world. It continues to receive orders for military hardware, the latest of which is a $2.6billion order to build land-attack missiles for the US Navy. Interestingly, $650 million of the $2.6 billion order is to supply harpoon missiles to Saudi Arabia.
Some experts are beginning to think that the Saudi Sovereign Wealth Fund’s move on Boeing goes a long way to affirm the long-term potential in this stock, which currently trades at $131.17 per share. This is a fraction of its February 2019 highs of nearly $440 per share.
The daily chart indicates that the breakdown of the symmetrical triangle did not have enough momentum to breach the 119.13 support level. The highs of 25 April and 25 July 2016 at 139.14 constitute the next resistance level to the bounce in price. A further advance could target the 21 November 2016 and 20 April 2020 highs at 151.64.
On the flip side, price rejection at the 139.14 could open the door for a renewed decline to 119.13, with the 90.40 price level (16 March 2020 lows) providing support below.