Southwest Airlines Stock Has Shed 30% Since Late 2019: Here’s Why

LUV: Southwest Airlines logo
Southwest Airlines

Southwest Airlines Co (NYSE: LUV) stock price lost more than 30% from $54 in 2019 end to around $37 currently, primarily due to unfavorable changes in its P/S multiple. During this period, the company’s sales have remained roughly flat and there was even a rise in the outstanding share count. Additionally, over the same period, the S&P 500 returned around 20%, meaning that Southwest stock has strongly underperformed the index since 2019-end.

In our interactive dashboard, Why Southwest Airlines Stock Moved: LUV Stock Has Lost 32% Since 2019, we break down the factors behind this move.

(A) LUV’s Total Revenue has remained roughly flat around $22 billion, the same level it was at in 2019

  • LUV’s total revenue initially dropped from $22.4 billion in FY 2019 to $9 billion in FY 2020 due to the pandemic.
  • However, revenues have strongly recovered since, jumping to $15.8 billion in FY ’21, and now stand much higher at $22.7 billion on an LTM basis, still at the same level as FY ’19.
  • One of the major airlines of the United States, almost 90% of Southwest’s sales came from the Passenger segment as of FY ’21, standing at around $14 billion, with Freight and Other sales bringing in the remaining 10% of sales in FY ’21.
  • For additional details about LUV’s revenues and comparison to peers, see Southwest Airlines (LUV) Revenue Comparison
Relevant Articles
  1. What’s Behind The 15% Fall In Southwest Airlines Stock Earlier This Week?
  2. What’s Next For Southwest Stock After A 20% Rise This Year?
  3. Gaining 20% In 2023 Will Delta Continue To Outperform Southwest Stock?
  4. Will Southwest Airlines Stock Recover To Its Pre-Inflation-Shock Level?
  5. Here’s A Better Pick Over Southwest Airlines Stock
  6. Southwest Airlines Stock Has Lost More Than 50% Since 2017- Here’s Why

(B) Revenue per share (RPS) decreased 5.4% from $40.69 in 2019 to $38.50 currently

  • LUV’s revenue rose marginally from $22.4 billion in 2019 to $22.7 billion currently, while the outstanding share count rose from 551.2 million in 2019 to 589.4 million currently.
  • Due to this, RPS has dropped from $40.69 in FY ’19 to $38.50 currently.

(C) Price-To-Sales (P/S) multiple for LUV rose strongly from 1.3x in 2019 to 3x by 2020 end, but has pulled back to 1x currently, even lower than its 2019 level

  • LUV’s P/S multiple rose to around 3x by late 2020, on the back of rising investor expectations surrounding increased demand for the company’s airline services.
  • However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 1x.
  • For additional details about the company stock returns, and comparison to peers, see Southwest Airlines (LUV) Stock Return Comparison.

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 Dec 2022
MTD [1]
YTD [1]
Total [2]
 LUV Return -9% -15% -27%
 S&P 500 Return -6% -20% 71%
 Trefis Multi-Strategy Portfolio -7% -23% 209%

[1] Month-to-date and year-to-date as of 12/20/2022
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates