Is JetBlue Airways Stock Poised For Sizable Returns?

by Trefis Team
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JetBlue Airways
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The shares of JetBlue Airways (NASDAQ: JBLU) have trended downward due to fears of sluggish travel & tourism demand in the near term. The fourth wave of the pandemic has caused uncertainty surrounding the timeline for a complete recovery of passenger numbers, but long-term trends look favorable. Moreover, the third round of payroll support is assisting employee salaries through September 30 – limiting operating losses even during the fourth wave. Notably, passenger numbers at TSA checkpoints have remained fairly stable in the past few weeks – pinning hopes of a quick recovery as infections decline. Also, the company incurred just $683 million of operating cash burn last year, much lower than the $2 billion drop in market capitalization since February 2020.

But how would these numbers change if you are interested in holding JetBlue Airways stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test JetBlue Airways stock expected return after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF JBLU stock moved by -5% over 5 trading days, THEN over the next twenty-one trading days, JBLU stock moves an average of 4 .5 percent, with a 60.7% probability of a positive return

Also, given a -5% movement for the stock over five trading days, it has historically witnessed an excess return of 2.4% compared to the S&P500 over the next 21 trading days, with a 51% percent probability of a positive excess return.

Some Fun Scenarios, FAQs & Making Sense of JetBlue Airways Stock Movements:

Question 1: Is the average return for JetBlue Airways stock higher after a drop?

Answer: Consider two situations,

Case 1: JetBlue Airways stock drops by -5% or more in a week

Case 2: JetBlue Airways stock rises by 5% or more in a week

Is the expected return for JetBlue Airways stock higher over the subsequent month after Case 1 or Case 2?

JBLU stock fares better after Case 1, with an expected return of 4.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 1.8% for Case 2.

In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a rise or drop.

Try the Trefis machine learning engine above to see for yourself how JetBlue Airways stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold JetBlue Airways stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For JBLU stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The expected return after a rise is understandably lower than after a drop as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

JBLU’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for JetBlue Airways stock by changing the inputs in the charts above.

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