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Risk Analysis and Investing in Boeing

           Boeing is an American based international company that designs, produces, and sells aircrafts, rotorcrafts, rockets, and telecommunication equipment. Additionally, the company offers leasing and product services. The company had a stock of about 187.02 US Dollars and a revenue of 76.56 US dollars as of 2019. Notably, just like any other commercial company, Boeing is also susceptible to several risks. Consequently, these risks hinder or scare potential investors from financing its various projects. This paper, therefore, analyzes the risks that face Boeing. Subsequently, it evaluates Boeing's investment risks.   

Liquidity Risk

           One of the risks facing Boeing is liquidity risk. Liquidity risk is the inability of shareholders to be incapable of selling their investments at a fair price at any time of the year. The risk may lead to the acceptance of lower prices as opposed to the market's normal pricing shares. Additionally, sometimes it might lead to being completely unable to sell the investments at all. Particularly, Boeing has been experiencing liquidity risk in the recent past, which has significantly reduced its shares. Consequently, the company has requested the United States government for approximately 60 billion US dollars (Bushey & Rennison, 2020). Besides, the company resolved to seek loans from banks of about 12 billion US dollars to ease liquidity needs (Guzmanan, Sierra & Weinm, 2020). The loan is to assist in overcoming the financial pressure resulting from company lurching from its production halt of 737 MAX planes (Guzmanan, Sierra & Weinm, 2020). Therefore, the liquidity risk in Boeing is scaring away investors due to the fear of unreliability or inconvenience in selling their investments whenever there is a need.

Credit Risk

           Another risk that Boeing could face is credit risk. Credit risk is the fear that the bond issuing companies or entities like the government may run into financial difficulties. Subsequently, the company may be unable to pay the interest of the bond or capital repayment when it matures. Credit risks apply in the scenario of investing in debt form like bonds. Notably, a company's credit risk is determined and evaluated through credit ratings of the bonds, usually in AAA. The higher the credit rating of the bond, the lower the credit risk. Boeing's credit rating has been reduced significantly due to the doubts over 737 MAX. The company's long-term credit rating was reduced from A to A- due to the inability of the MAX project to return to services (Reuters, 2020). Additionally, its company's financial cushion has reduced significantly, which exposes it to unpredicted events. Consequently, Boeing has low credit quality with high default risks. Moreover, the company the company's debt is expected to double due to the credit risk that it is facing. Therefore, it is risky to invest in a company with such a considerable credit risk.

 Market Risk

           In addition, Boeing is exposed to market risk. Market risk is the reduction in the value of investments due to uncertain economic development or other events and factors that affects the whole market. For example, the Boeing Company may face a marketing risk due to a decline in the number of travelers or a decline in the purchase of its products. The three types of market risk include equity, interest rate, and currency risks. Equity risk typically affects the investment shares when shares vary all the time due to the demand and supplies. Therefore, the drop in the market prices leads to equity risk making the investors to shy away from companies that are prone to such risks like Boeing.

           Last but not the least, Boeing faces interest rates risk. Interest rates risks usually apply in a case of debt investments. The fluctuation in the exchange rates for companies significantly affects the interest rate, hence losing money. Notably, an increase in the interest rate automatically decreases the market values of bonds. Furthermore, an investment may face currency risk in a situation of foreign investments. The money is lost due to the fluctuation in exchange rates. Boeing, as a company, is situated in the United States. Therefore, any investments from any other country are susceptible to currency risk due to variation in the exchange rates. If US dollars become less valuable concerning the investors' country, the stock worth may reduce significantly. 

Conclusion

           In conclusion, Boeing is susceptible to a number of risks. Subsequently, these risks hinder or scare potential investors from financing their projects. The inability of shareholders to be incapable of selling their investments at any time of the year at a fair price is of the major risks in the Boeing Company. Additionally, the company is faced with the fear that the bond issuing companies or entities like the government may face financial difficulties making them unable to pay the interest or the capital. Furthermore, the reduction in the value of investments due to uncertain economic development or other events and factors is one of the risks that affect the Being whole market. Therefore, any investor needs to familiarize themselves with these risks to evaluate and invest cautiously.