What happened
Investors lessened their enthusiasm for airline stocks on Thursday, following the coronavirus-inspired monster of the vaccine on Wednesday in such actions.
In yesterday’s trade, the shares of United airlines (NASDAQ: UAL) over 14% shot up and American airlines (NASDAQ: AAL) gained 16%. Discount airline Spirit (NYSE: SAVE) made a profit of 12%, and even Delta airlines (NYSE: DAL) – loaded with bad news earlier in the week – closed 9.5% higher.
Today, however, what went up comes down again.
Image source: Getty Images.
And that
In early trading on Thursday, around 11:11 am EDT, United is returning 3.9% and Spirit 4.7%. Delta was down 5.1% and US stocks, yesterday’s biggest winner, are leading the industry lower with a loss of 5.9%.
Why? In part, at least (perhaps a large part), I see this as investors securing profits in an upside-down market for airline stocks. Few industries have been as volatile as airlines during the coronavirus pandemic, as investors scatter for fear of bankruptcy concerns one day, only to merge and buy back shares and deliver the news on any news that may suggest a “return to imminent “normality.
Yesterday was one of those last days, with a vaccine maker Modern announcing optimistic test results for its new coronavirus vaccine. The observation that “100% of the evaluated participants” in the trial produced “neutralizing antibodies” in response to the Moderna vaccine sounded particularly encouraging.
Now what
Today, however, we are moving in the opposite direction. For one thing, investors may be selling stocks to secure yesterday’s windfalls, under the (historically sound) assumption that stocks will be cheaper again, allowing them the ability to buy back at a later date.
At the same time, today is a bit of bad news about airline stocks, with The Wall Street Journal, for example, highlighting the layoffs of the airline industry in a higher column today: 25,000 newly announced job cuts at American, for example, and another 36,000 future job losses at United, all because “travel demand falls again amid increasing numbers of coronaviruses. ” Meanwhile, Johns Hopkins University reports that global COVID-19 infections have just hit a record one-day increase.
With news like that, I really can’t blame investors for guaranteeing yesterday’s earnings won’t go away, or criticizing their logic for thinking that there will be more opportunities to buy back airline stocks at lower prices, as the bad news is still good. . , day after day, to infinity.
Such is the life of an airline stock investor.
