Boeing falls 4% as NASA considers SpaceX Starship to replace SLS
Aerospace giant's flagship space program faces reduced role amid $4B per launch costs and mounting delays
Boeing shares fell 4% on Friday, extending a steep decline that has left the stock trading below both its 50-day and 200-day moving averages, as NASA reportedly considers replacing the company's Space Launch System with SpaceX's Starship for critical lunar transit missions.
The aerospace giant's stock dropped to $193.29 by midday trading, compounding losses that have pushed the shares 14% lower since late January. The decline reflects mounting investor concerns about Boeing's deteriorating position in a cornerstone space program, even as the company contends with production delays, heavy debt loads, and mounting losses across its defense division.
Under the proposed restructuring of NASA's Artemis lunar program, Boeing's SLS rocket would be relegated to launching the Orion crew capsule into Earth orbit, with SpaceX's Starship assuming the critical role of docking with Orion and propelling astronauts to lunar orbit and the lunar surface, according to reports from multiple outlets. The shift represents a significant downgrade for Boeing's flagship space program, which has been plagued by cost overruns and delays.
The SLS program has drawn criticism for its extraordinary costs, with each launch estimated at approximately $4 billion. By contrast, SpaceX's reusable Starship architecture promises dramatically lower costs per mission, accelerating NASA's timeline for returning astronauts to the lunar surface. NASA Administrator Jared Isaacman announced a major revamp of the Artemis program in late February, aiming to increase mission cadence and leverage commercial capabilities.
NASA has already signaled waning confidence in Boeing's space capabilities. The agency canceled a multibillion-dollar upgrade to the SLS Block 1B rocket, known as the Exploration Upper Stage, indicating concerns about cost control and program management. Boeing had secured a $3.2 billion contract in December 2022 for additional SLS core and upper stages for future Artemis missions, but the scope of that work now faces substantial reduction.
The proposed changes come at a precarious moment for Boeing's broader business. The company's Defense, Space & Security division has accumulated substantial losses across multiple programs, with the Starliner capsule alone losing $2 billion by February 2025. Other troubled programs include the KC-46 tanker, T-7 trainer, VC-25B Air Force One replacement, and MQ-25 drone, with the T-7A program accounting for a $500 million loss due to production cost overruns.
Boeing's commercial aircraft division faces its own headwinds. The company slowed deliveries of some 737 MAX aircraft in March after discovering scratched electrical wiring on approximately 25 undelivered jets, a manufacturing defect attributed to a machining error. Around 10 of the anticipated 120 737 deliveries for the first quarter are expected to shift to the second quarter, compounding earlier production challenges that have included fuselage defects and the 2024 MAX 9 door plug blowout incident.
Financially, Boeing carries a $54.1 billion debt load, with a substantial $8 billion balloon payment due later in 2026. The company's debt-to-equity ratio stands at 9.98, indicating considerable leverage that constrains its ability to invest in new programs. Boeing reported a loss of $9.92 per share in its first quarter, disappointing analyst expectations despite a 57% year-over-year increase in revenue to $23.9 billion.
The Commercial Airplanes division is expected to operate at a loss through the first half of 2026, with a projected operating margin loss of 7.5% to 8% for the first quarter, partly due to integration challenges following Boeing's December acquisition of Spirit AeroSystems. The company aims to return the division to stable-to-slightly positive margins by year-end.
Analysts maintain a consensus target price of $271.62 for Boeing, representing roughly 40% upside from current levels, according to market data. However, that target seems increasingly disconnected from the company's deteriorating operational and financial position. The stock's forward price-to-earnings ratio stands at an elevated 149.25, suggesting investors have been pricing in a turnaround that now appears increasingly uncertain.
NASA officials are scheduled to meet with Boeing, SpaceX, and Blue Origin on March 24 to discuss the potential changes to the Artemis architecture. The outcome of those discussions will be closely watched by investors, as Boeing's reduced role in lunar missions could eliminate a critical revenue stream for its space division precisely when the company can least afford further setbacks.
Boeing remains a key NASA contractor, with the agency stating its commitment to utilizing the SLS architecture through at least Artemis V. But the company's shrinking footprint in America's return to the Moon underscores a broader competitive challenge: Boeing's traditional model of cost-plus government contracting is increasingly at odds with an era that favors the rapid, reusable innovation championed by SpaceX and other commercial space pioneers.