Why Southwest Airlines Lost Altitude Today
Southwest shares fell after the company said it is yet to see a rebound in demand.
The company's comments appear to be at odds with statements from rivals, raising questions about whether this is in part a Southwest-specific issue.
10 stocks we like better than Southwest Airlines ›
Southwest Airlines (NYSE: LUV) has not yet seen a rebound in demand for travel, disappointing investors who had been hoping for a quick turnaround.
Southwest shares fell as much as 4.5% when comments were made by the company's CFO before rebounding somewhat and trading down 1% as of 2:30 p.m. ET.
Airline stocks are highly cyclical in nature. When budgets get tight, it is easier to skimp on travel than the grocery bill, meaning airlines tend to see demand fall when the broader economy is under pressure.
Several airlines withdrew or scaled back full-year guidance during earnings season, complaining of a surprise collapse in demand late in the first quarter. There was some hope the collapse would be short-lived.
Southwest CFO Tom Doxey, speaking Thursday at a Wall Street conference, said, "We have not seen in the industry an inflection back" toward more robust demand. Doxey said unit revenue in the first quarter was about three points worse than what they had expected heading into 2025, and second-quarter unit revenue is trending toward about six points worse than what was expected.
That's not good news, and there is some reason for investors to worry it is a Southwest-specific issue.
A day earlier, United Airlines Holdings said it was seeing a "stable" revenue and booking environment heading into the busy summer travel season.
Investors shouldn't make too much of the Southwest/United comparison, as they were slightly different questions, but Southwest could indeed be a standout to the downside.
The company is early in the process of revamping its business model, including getting rid of popular features, including free checked bags. Although Southwest said it has not seen a consumer backlash so far, it is possible consumers are booking elsewhere.
Even in the best-case scenario, Southwest is a company in transition during a dangerous period for the industry. Investors have every reason to be cautious as the summer travel season plays out.
Before you buy stock in Southwest Airlines, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Southwest Airlines wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $807,814!*
Now, it's worth noting Stock Advisor's total average return is 962% — a market-crushing outperformance compared to 169% for the S&P 500. Don't miss out on the latest top 10 list, available when you join .
See the 10 stocks »
*Stock Advisor returns as of May 19, 2025
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.
Why Southwest Airlines Lost Altitude Today was originally published by The Motley Fool
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
34 minutes ago
- Yahoo
UBS Upholds Buy Recommendation on Deckers Outdoor (DECK)
On June 5, UBS analysts maintained a Buy rating on Deckers Outdoor Corporation (NYSE:DECK) with a price target of $169. The analysts expect Decker's EPS to top market estimates over the coming year as sales projections increase for its Hoka brand. They also anticipate UGG to keep up its record as a major global casual footwear brand. A customer browsing a retail store, finding the perfect footwear for their casual outfits. The analysts were confident that Deckers Outdoor Corporation (NYSE:DECK) could deliver a low double-digit compound annual sales growth. They forecast that this growth could drive Deckers' forward PE ratio over 20x, compared to the present 16.7x. The $169 price target by UBS reflects a 60% upside for DECK. The stock has plummeted nearly 47% over the last six months, which signals a buying opportunity. After discussions with company management on June 4, the analysts were optimistic about Deckers Outdoor Corporation (NYSE:DECK)'s potential for growth. Despite the market showing caution with reference to the Hoka brand's capacity to sustain robust growth, UBS believes that DECK is perfectly tackling concerns about industry competition, evolving fashion trends, and dependence on Clifton and Bondi franchises. The analysts see double-digit revenue growth for Hoka in the next few years. Deckers Outdoor Corporation (NYSE:DECK) designs and markets premium footwear and apparel worldwide with brands like UGG and HOKA. The company was established in 1973 and is headquartered in Goleta, California. While we acknowledge the potential of DECK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 11 Stocks That Will Bounce Back According To Analysts and 11 Best Stocks Under $15 to Buy According to Hedge Funds. Disclosure: None. Sign in to access your portfolio
2 hours ago
How major US stock indexes fared Friday, 6/6/2025
Stocks rose on Wall Street following a better-than-expected report on the U.S. job market. The S&P 500 climbed 1% Friday, marking its second weekly gain in a row. The Dow Jones Industrial Average added 1%, and the Nasdaq composite rose 1.2%. U.S. employers slowed their hiring last month, but still added a solid 139,000 jobs amid uncertainty over President Donald Trump's trade wars. Lululemon Athletica sank after lowering its profit forecast for the full year. On Friday: The S&P 500 rose 61.06 points, or 1%, to 6,000.36. The Dow Jones Industrial Average rose 443.13 points, or 1%, to 42,762.87. The Nasdaq composite rose 231.50 points, or 1.2%, to 19,529.95. The Russell 2000 index of smaller companies rose 34.89 points, or 1.7%, to 2,132.25. For the week: The S&P 500 is up 88.67 points, or 1.5%. The Dow is up 492.80 points, or 1.2%. The Nasdaq is up 416.19 points, or 2.2%. The Russell 2000 is up 65.96 points, or 3.2%. For the year: The S&P 500 is up 118.73 points, or 2%. The Dow is up 218.65 points, or 0.5%. The Nasdaq is up 219.16 points, or 1.1%. The Russell 2000 is down 97.91 points, or 4.4%.
Yahoo
2 hours ago
- Yahoo
Lemonade (LMND) Reports Q1 Earnings: What Key Metrics Have to Say
Lemonade (LMND) reported $151.2 million in revenue for the quarter ended March 2025, representing a year-over-year increase of 27%. EPS of -$0.86 for the same period compares to -$0.67 a year ago. The reported revenue represents a surprise of +5.05% over the Zacks Consensus Estimate of $143.93 million. With the consensus EPS estimate being -$0.94, the EPS surprise was +8.51%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Lemonade performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: In force premium (end of period): $1.01 billion compared to the $999.35 million average estimate based on four analysts. Premium per Customer (end of period): $396 versus $394.15 estimated by four analysts on average. Customers (end of period): 2,545,496 versus the four-analyst average estimate of 2,535,658. Net loss ratio: 82% versus the four-analyst average estimate of 89%. Gross loss ratio: 78% compared to the 80.8% average estimate based on four analysts. Net investment income: $9.50 million versus the four-analyst average estimate of $8.45 million. The reported number represents a year-over-year change of +25%. Ceding commission income: $26.90 million versus $22.06 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +28.1% change. Commission income: $10.50 million versus the four-analyst average estimate of $8.02 million. The reported number represents a year-over-year change of +72.1%. Net earned premium: $104.30 million compared to the $105.18 million average estimate based on four analysts. The reported number represents a change of +23.6% year over year. View all Key Company Metrics for Lemonade here>>>Shares of Lemonade have returned +6.7% over the past month versus the Zacks S&P 500 composite's +11.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lemonade, Inc. (LMND) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
