Don't Expect a U-Shaped Recovery by Southwest Airlines Stock
Airline stocks are an excellent gauge of the progress of America’s economic recovery from the novel coronavirus. Southwest Airlines (NYSE: ) will only prosper if consumers feel that flying is safe and have enough disposable capital to spend on airfare. Thus, the fate of LUV stock holders depends on a myriad of factors, some of which are out of the company’s control.
It’s sad to say, but the hopes of a V-shaped rebound by the U.S. economy were abandoned long ago. Sure, tech stocks are flying high and, to a large extent, are propping up the stock market. But stocks in some other sectors, including airlines, have struggled.
Is a U-shaped recovery by LUV stock possible at this point? If so, that would mean that Southwest could return to its pre-pandemic levels in the near future. That’s an exciting scenario to consider, but it might not be realistic.
A mix of positive and negative factors paint a complex picture for the airline industry in general and for Southwest in particular. There are reasons to own LUV stock, but it’s only an appropriate investment for the most patient among us.
Prior to the onset of the coronavirus, the bulls were eyeing the $60 level for LUV stock’s next leg up. Frustratingly, the stock price didn’t get there before the Covid-19 pandemic started.
After a swift and alarming decline, the LUV stock price bottomed out in May at $22.47. That’s interesting because many other American stocks hit bottom ...
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