Donald Trump wipes $1bn from Boeing's stock market value with Air Force One tweet
Donald Trump’s words do not only cause a storm on social media, they also affect capital markets.
The president-elect’s latest feud is with Boeing, the major US manufacturer of airplanes. In a tweet, he said that the costs for the company’s new Air Force One government plane were "out of control" at $4 billion and the government contract should be canceled.
Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!— Donald J. Trump (@realDonaldTrump) December 6, 2016
Before his tweet, the company was trading at $152.16 per share. After the tweet, it fell about 1 per cent during pre-market trading on Tuesday to $149.75 per share, according to FactSet.
The bump was temporary as the share price has since recovered and are still up about 5 per cent year to date, but the dip shows the knee-jerk reaction from investors when the president-elect expresses his views on a company.
Boeing won a contact in January to stat working on a new fleet of government aircraft, called Air Force One.
They won an initial contract worth almost $26 million to reduce risk and lower cost.
The former CEO of Boeing, Jim McNerney, sits on Mr Trump’s transition team.
Asked by reporters at Trump Tower on Tuesday morning about his tweet, he said the costs were “ridiculous”.
Mr Trump did not say he had phoned the current CEO of the company, Dennis Muilenburg.
Mr Muilenburg has only made measured comments about Mr Trump’s plans on international trade. Speaking at a manufacturers’ association in Illinois last week, he said: “I'm not a political pundit or prognosticator — we have too many of those — but anyone who paid attention to the recent campaigns and the election results realises that one of the overarching themes was apprehension about free and fair trade.”
The president-elect has recently intervened with businesses, phoning up air conditioning plant Carrier in Indianapolis, persuading them to save less than half of their jobs from moving to Mexico.
He also claimed he had persuaded Ford to halt its plans of moving to Mexico, but Ford later clarified it had no intention of leaving and was only considering moving one production line.