Have JetBlue shares bottomed out?

Airline stocks are now on a two day winning streak. As an overall industry, airlines experienced the worst of the 37% stock market sell-off last March. JetBlue fell from its

52-week high of $21.65 to $6.61, which is a 69% drop. Currently, the stock is trading at $8.93 and is looking for a breakthrough above $9.

The stock market has tremendously bounced back since its low in March. Tech stocks have been leading the markets 30% bounce back and airlines have been lagging. Have airlines, specifically JetBlue, bottomed out? Is now a good time to invest in JetBlue?

Investors are rallying for the future

Last Thursday, JetBlue reported a net loss of $268 million this past quarter, a loss of 97 cents a share, down from net income of $42 million, or 14 cents a share for the same period last year.

Total revenue was reported of $1.59 billion, down 15.1% from a year ago, missing FactSet's estimate of $1.7 billion in revenue. 

Revenue declined 52% in March because of the coronavirus pandemic. Travel restrictions, lockdowns, and quarantines decreased demand for the airline company. After reporting earnings, the company predicted that sales will increase in the near future, which has encouraged investors to begin buying shares.

“We believe demand bottomed out in mid-April,” said Chief Operating Officer Joanne Geraghty in a call analysts, according to a FactSet transcript. “We are starting to see some very small improvements in bookings,” she said.

The company was burning as much as $18 million a day, but Chief Financial Officer Steve Priest said that number is now down to $12 million a day. After expense cuts and capital expenditure revisions the company has better leveraged themselves to handle the demand pandemic.

“As we head into May, we expect that cash burn to be just under $10 million per day,” Priest said. “We expect to see further improvements in the third quarter, and our cash burn to range between $7 million and $9 million per day.”

Share prices have potentially bottomed out

JBLU daily chart. Source: TradingView

Shares of JetBlue have proven strong support at the $8.00 price floor. The stock has been able to hold the same support floor for three weeks, indicating a bottom out. This is a good indicator that the stock has been oversold and buyers are entering the market and buying shares.

JetBlue shares soared today, earning 11% and closed above its $9.00 price ceiling. Investors didn't just pump the stock up and sell-off, but decided to hold shares. It appears as if there has been a breakout and the stock could rally another 11% to $10.00 next week.

JBLU weekly chart. Source: TradingView

On the weekly chart, the airline company is showing an upward trend. It's important to note the weekly lows of the stock. The stock is constantly creating higher lows, which is an indicator that the stock has more support at higher price levels.

Airline stocks are risky because their future is unknown. Their business is dependent on how soon people decide to travel and if they choose to travel via planes. As usual financial movers, be sure to research JetBlue before boarding onto their stock.

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DISCLAIMER: This article does not contain financial advice. Any and all market analysis is solely the authors opinion. Investors should do their own research before making any investment.