Airlines Stock: Crashing or Preparing for Lift Off?
Airline stocks have seen a dramatic fall in price this week as airlines continue to bleed more and more money. News that Warren Buffet's investing conglomerate, Berkshire Hathaway, had sold its airline stocks prompted a quick sell off. As virus-related fears of travel continue to exist, companies like American Airlines (AAL), Delta Airlines (DAL), Alaskan Air (ALK), and United (UAL) are seeing their stock prices drop anywhere from 16%-23% during this week alone.
Uncertainty is like poison for investors, but one thing is certain: the pandemic won't last forever. It may take six months, a year, or even longer before a vaccine is available, but it will eventually arrive. People will be flying like they did before the pandemic, and perhaps, if we're lucky, life will return to normal even sooner than that. That brings us to our main question: are airline stocks a good long-term investment? Well, take a look at the graphs, and judge for yourself.
American Airlines is priced at $9.18/share, compared with its "pre-corona" price of $30 and its previous five-year high of $58.
Similarly, United is trading a $22.50/share, down from its "pre-corona" price of $80 and its five-year high of $96.
Other airline companies have followed the same trajectory and are at the lowest prices we have seen since the great recession. The potential returns could be upwards of 200% if airline stock prices go back to even half of their former trading price, and the returns could be as high as 400-600% if they recover fully over the next months or few years. If you have some money to invest and are willing to be patient, you may want to snatch up some stocks while they're cheap!