Bombardier, Inc. (OTCMKTS:BDRBF) Declines Following Cutback News: Stock Reaction

Stocks of Bombardier, Inc. (OTCMKTS:BDRBF) plummets to a five-month low following cutbacks in the business-plane unit and delays to the production of the C Series jetliner.

Bombardier Inc. dropped to a five-month low on anxiety over cutbacks in the business-plane unit and additional delays to the production ramp-up of the C Series jetliner.

“Investors are concerned about another potential production cut in 2017, particularly for the Global 5000/6000 models, which carry the highest margins in Bombardier’s business-jet portfolio,” Konark Gupta, a Macquarie Capital Markets analyst, said in a note to clients.

The possibility that the Global 7000 could enter service later than planned also weighed on the stock. The Montreal-based planemaker has said that deliveries of the business jet would begin in 2018.

A supplier has been struggling with “the wing of the 7000, which will be a profitable product,” said  Cai Von Rumohr, a Cowen & Co. analyst. “The target is to start delivering it in 2018, and that could be an issue.”

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Shareholders also are worried about potential slippage in planned deliveries of the C Series, Gupta said. Pratt & Whitney on Friday cut the 2016 target for shipments of its new geared-turbofan engine, which the C Series uses, as it grapples with production issues. Bombardier previously slashed the delivery forecast for C Series aircraft to seven this year from 15, citing delays in receiving turbines from the United Technologies Corp. unit.

Bombardier’s widely traded Class B stock tumbled 5.1 percent to C$1.66 at 2:57 p.m. in Toronto. The shares earlier touched C$1.61, their lowest level since April 19. Bombardier fell Friday and Monday.

Mike Nadolski, a Bombardier spokesman, didn’t immediately respond to a request for comment.

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Potential investors in Bombardier, Inc. (OTCMKTS:BDRBF) should be looking at the current and historical short data in order to get a glimpse of where the market believes the stock might be headed.  According to the most recent information, there are 47759800 total short interest.  Given the stock’s average daily volume of 185141, this results in 185.7 days to cover.  In looking at the total shares short in respect to the total outstanding share total of 2222220000, yields a 0.02149% of total shares that are short.  Compared to last month, this is a 2.99 change in total short interest.

When investors engage in short selling or “shorting a stock”, they actually borrow shares from an existing owner, sell the borrowed shares at market price, and take the cash.  The short sellers then promise to replace the stock in the future and makes dividend payments out of their own pockets to cover the dividend income that is no longer exists on the original, now borrowed and sold, shares.

They hope that the stock price will fall or that the company will fail and go bankrupt, leading the equity holders to ruin.  The short sellers will then buy the stock back at a much lower price and replace the borrowed shares, pocketing the difference.

Shorting a stock can be very risky if the price doesn’t decline like planned and, in fact, increases.  It’s important for any investor to understand the dangers and potentially catastrophic financial losses of short selling.

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Bombardier, Inc. (OTCMKTS:BDRBF) shares closed the most recent session at $1.28, moving from the previous open of $0.02.  This is compared to the stock’s 52-week high of 1.82 and 52-week low of 0.51.  Is now the right time to take stake in the 2440000000 market cap company?

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Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.

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