Someone explain why JetBlue at $8 is a bad “small” investment (i.e. couple grand) - I think their decision to purchase Spirit was smart.

likehelpful
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“At $8” means nothing unless you know market cap and how many shares are outstanding. Look at the P/E ratio and the debt ratio—airlines are notoriously overleveraged (and a acquisition of a competitor likely added to that debt load!)

likesmart

Additional volume (market share) at poor unit economics would rapidly destroy value.

Big picture, you need two things to make money: 1. A differentiated point of view (either that the market is fundamentally underestimating the magnitude/timing of future cash flows OR that the market is assigning a greater than necessary risk premium to future cash flows) and 2. You need to be right.

As others have mentioned, $8/share means nothing without context. What is their current enterprise value, and what do you think their enterprise value should be - and why? That allows you to back into a target share price.

like

Blue Star airlines may be a better option.

likefunnysmart

Blue….waffle???

funnylike

Go index funds over single stocks.

like

I have no idea how it will do, but what do you think you know that everyone else doesn’t?

like

Airlines traditionally have ridiculously thin margins and budget airlines even more so.

like

In fact, I believe the entire industry in aggregate has never been profitable. I believe 100% of Delta’s profit comes from selling Skymiles to Amex.

like

You aren’t smarter than the market.

likesmart

(I’m kidding about the second half)

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