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JetBlue Is Down By 8%, Here Is Why

Key Insights

  • JetBlue exceeds analyst estimates on earnings, but traders focus on capacity cuts. 

  • The deal with Spirit Airlines continues to serve as a negative catalyst for JetBlue stock. 

  • The company needs to come up with positive catalysts to break the current downside trend of its stock. 

JetBlue Stock Declines After Q1 2022 Report

Shares of JetBlue Airways  gained downside momentum after the company released its first-quarter report. JetBlue reported revenue of $1.74 billion and a loss of $0.80 per share, meeting analyst estimates on revenue and beating them on earnings.

JetBlue noted that capacity declined by 0.3% year-over-three, which was an improvement compared to its guidance, which called for a decline of 1% year-over-three.

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However, the market was not impressed, as JetBlue said that it would futher reduce its capacity. The company stated: “To help restore our operational reliability, we are reducing our capacity growth further as we plan more conservatively for the summer and make investments to de-risk the operation”.

What’s Next For JetBlue Stock?

On April 5, JetBlue announced that it would buy Spirit Airlines. This decision triggered a sell-off as the market was worried about the hefty premium that JetBlue agreed to pay for Spirit Airlines. After this pullback, JetBlue stock has started to rebound together with other airline stocks, but concerns about capacity cuts have led to another sell-off.

Meanwhile, analyst estimates continue to move lower. JetBlue is expected to report a loss of $0.59 per share in the current year and a profit of $1.28 per share in the next year, so the stock is trading at roughly 9 forward P/E.

It remains to be seen whether traders will be ready to buy the stock after the recent pullback due to concerns about capacity cuts and the deal with Spirit Airlines. Analyst estimates will likely move even lower, which will be bearish for JetBlue stock.

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This article was originally posted on FX Empire

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