© Reuters. The company logo for Boeing is displayed on a screen on the floor of the NYSE in New York
By Sanjana Shivdas
(Reuters) – Boeing (NYSE:) Co shares fell by the most in three years on Monday after China, Indonesia and Ethiopia ordered airlines to ground their 737 MAX 8 planes following the second deadly crash of one of the jets in just five months.
The drop – around 7 percent in late morning trade – wiped nearly $16 billion off Boeing’s market value, marking an abrupt reversal for a stock that had been the runaway top performer this year in the .
With a stock price near $400 a share, it was by far the largest drag on the price-weighted blue chip index on Monday.
A Nairobi-bound Boeing 737 MAX 8 operated by Ethiopian Airlines crashed minutes after takeoff from the country’s capital Addis Ababa on Sunday, killing all 157 on board. The same model, flown by Lion Air, crashed off the coast of Indonesia in October, killing all 189 on board.
“The grounding of the 737 MAX by China, Indonesia, and Ethiopian are near-term reputational negatives for Boeing that could impact sales, particularly if the FAA follows suit and also grounds the plane,” Cai von Rumohr, analyst at Cowen & Co, said in a research note, referring to the U.S. Federal Aviation Administration.
Still, von Rumohr and other analysts said the accident should not pose a long-term risk to a stock that has delivered the richest total return among the 30 stocks in the Dow over the 10 years of the current bull market. Since U.S. stocks began rebounding from the financial crisis in March 2009, Boeing shares have delivered a total return, including reinvested dividends, of nearly 1,600 percent, four times the performance of the