Wall Street Breakfast Podcast: Boeing Grounds Test Fleet

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Boeing (BA) grounds 777X test fleet after finding cracks in engine mounting structure. (00:24) Tax firm Andersen Global evaluating IPO – WSJ. (01:28) Workhorse (WKHS) raises doubts about ability to continue as going concern. (02:23)

This is an abridged transcript of the podcast.

Boeing (NYSE:BA) is grounding its 777X test fleet after an inspection found cracks in a key engine mounting structure.

Air Current reported Monday that Boeing (BA) has orders for 540 of the new aircraft that it plans to start delivering in 2025, and the impact of the latest problem on the plane’s launch date is not yet known.

The issue marks the latest setback to Boeing’s (BA) effort to certify its largest jetliner, which already is about five years behind schedule, after finally starting flight tests with U.S. regulators on board last month.

Boeing (BA) described the part as a structural component between the engine and the airplane.

Earlier Monday, the Federal Aviation Administration issued an airworthiness directive requiring inspections of Boeing’s (BA) 787 Dreamliners, in response to an incident in March when a Latam Airlines jet took a sudden nosedive after a cockpit seat reportedly moved, injuring more than 50 passengers.

Legal and tax services firm Andersen Global is evaluating an initial public offering for its U.S. business.

Nearly all the accounting firm’s 264 participating partners voted to support a potential IPO earlier this month, according to a WSJ report on Monday, which cited internal memos viewed by the publication.

Andersen CEO Mark Vorsatz told partners that Andersen is targeting an IPO for late next year, according to the report. Vorsatz is also evaluating an investment from a private-equity firm or private family-owned company.

Andersen Global competes with H&R Block (HRB) and CBIZ Inc. (CBZ), among the few publicly traded companies that provide tax services. Andersen Global is a tax and legal services firm that was formed at least partly by some former Arthur Andersen partners after the collapse of the accounting firm in the early 2000s following the Enron scandal.

Workhorse (NASDAQ:WKHS) is down 11% in premarket action after gaining more than 3% on Monday.

Shares are losing ground after the company reported its delayed Q2 results and raised doubts that it can continue as a going concern.

“As a result of our recurring losses from operations, accumulated deficit, projected capital needs, and delays in bringing our vehicles to market and lower than expected market demand, substantial doubt exists regarding our ability to continue as a going concern within one year after the issuance date of the accompanying Condensed Consolidated Financial Statements,” the company said in a filing with the U.S. Securities and Exchange Commission.

Last week, Workhorse (WKHS) postponed the release of Q2 results.

For Q2 Workhorse (WKHS) reported a loss of $26.3M, or $(1.40) per share versus $(2.40) per share in the same quarter last year on a 78% drop in revenue to $842,440. The number of shares outstanding in the most recent quarter doubled to 18.9K due to a reverse stock split in June.

On the balance sheet, cash and cash equivalents plummeted to just $5.3M from $62.4M at the end of June 2023.

Additionally, the company’s efforts to raise cash through the sale leaseback of its Union City, Indiana manufacturing facility has failed to find a buyer.

Workhorse (WKHS) will conduct its earnings call today at 11am ET.

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Catalyst watch:

• Samsung (OTCPK:SSNLF), Xbox (MSFT), Take-Two Interactive (TTWO), Krafton, and SK Gaming will be some of the exhibitors at Gamescom 2024 in Cologne, Germany.

• Texas Instruments (TXN) will webcast an off-cycle capital management call at 11am. During the webcast, top executives will provide more granularity on TI’s capacity investments. The discussion will also include a framework of revenue and free cash flow per share scenarios.

• Serve Robotics (SERV) will present at the EnerCom Denver Conference.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in mixed territory. Crude oil is down 0.2% at $73/barrel. Bitcoin is up 4.9% at $60,000.

In the world markets, the FTSE 100 is flat and the DAX is up 0.1%.

The biggest movers for the day premarket: Hawaiian Holdings (NASDAQ:HA) is up 10% after Alaska Air (ALK) announced that the Department of Justice’s review period for their proposed $1.9B merger had expired.

On today’s economic calendar:

• 2:45 pm Fed’s Michael Barr will participate in a Cybersecurity discussion at the Joint Financial and Banking Information Infrastructure Committee at the Financial Services Sector Coordinating Council meeting in Washington, D.C.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.