What Led To A 62% Fall In JetBlue Stock Since 2019?

-9.96%
Downside
7.11
Market
6.40
Trefis
JBLU: JetBlue Airways logo
JBLU
JetBlue Airways

Despite a 9% rise this year, JetBlue Airways stock (NASDAQ: JBLU) looks like it can see higher levels. JetBlue stock has risen from $6.50 in early January to $7.04 now. This performance aligns with the 7% return for the broader S&P500 index. Looking at a slightly longer term, JBLU stock is down a significant 62% from levels seen in late 2019. This can be attributed to 1. the company’s P/S ratio, which plunged 62% to 0.3x trailing revenues from 0.7x in 2019, 2. its average shares outstanding rising 14% to 327 million, partly offset by 3. a 13% rise in JetBlue Airways revenue to $9.2 billion—our interactive dashboard, Why JetBlue Airways Stock Moved, has more details.

JetBlue primarily earns its revenues from selling air tickets and other ancillary services such as freight and mail. The rise in revenues over the recent years can be attributed to a rebound in air travel demand, with passenger traffic and ticket yield rising meaningfully in the last few years. JetBlue’s available seat miles (ASM) plunged from 63.8 million in 2019 to 32.7 million in 2020 before rebounding to 64.5 million in 2022. The company’s passenger revenue per average seat mile (PRASM) fell from 12.20 cents in 2019 to 8.36 cents in 2020 before rebounding to 13.32 cents in 2022. The demand for air travel is expected to remain high in the near term, boding well for JetBlue in the near future.

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JetBlue’s operating margin stood at 9.5% in 2019, before the pandemic, and it fell to -63.2% in 2020 before recovering to -4.6% in 2022. Our JetBlue Airways (JBLU) Operating Income Comparison dashboard has more details. Looking at valuation, we find that JBLU stock has more room for growth. We estimate JetBlue Airways’ Valuation to be $8 per share, about 18% above the current market price, representing a 0.3x P/S multiple based on TTM revenues.

JetBlue stock has been weighed down over the last year or so owing to concerns around its proposed acquisition of Spirit Airlines. JetBlue and Spirit agreed to merge last year in a $3.8 billion deal. However, last month, the Justice Department filed a lawsuit seeking to block the proposed merger of JetBlue and Spirit, stating that it will lead to increased fares. [1]

While JBLU stock may have more room for growth, it is helpful to see how JetBlue Airways’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for FedEx vs. Amkor.

With inflation rising and the Fed raising interest rates, among other factors, JBLU stock has fallen 48% in the last twelve months. Can it drop more? See how low JetBlue Airways stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Apr 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 JBLU Return -3% 9% -69%
 S&P 500 Return 0% 7% 83%
 Trefis Multi-Strategy Portfolio -1% 7% 236%

[1] Month-to-date and year-to-date as of 4/5/2023
[2] Cumulative total returns since the end of 2016

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Notes:
  1. Justice Department Sues to Block JetBlue From Buying Spirit Airlines, Dave Michaels
    and Andrew Tangel, The Wall Street Journal, Mar 7, 2023 []