Is The 21% Drop In LUV Stock, A Buying Opportunity?

Southwest Airlines stock has fallen by 21.2% in less than a month, from levels of $37.70 on 7/14/2025 to $29.56 now. Should you buy this dip? Dip buying is a viable strategy for quality stocks that have a history of recovering from dips.

As it turns out, Southwest Airlines passes basic quality checks. However, it only has one past instance where it dipped sharply (>30% in 30 days), and returned 69% in one year and 69% as peak return subsequently. LUV operates scheduled passenger air transportation in the U.S. and nearby markets with a fleet of 728 Boeing 737s, serving 121 destinations across 42 states, D.C., and Puerto Rico.

Price behaviour is one thing, but what do the fundamentals say? Read Buy or Sell LUV Stock to see the full picture.

That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

Historical Median Returns Post Dips

Historical Dip-Wise Details

LUV had 1 events since 1/1/2020 where the dip threshold of -30% within 30 days was triggered

• 69% median peak return within 1 year of dip event
• 365 days is the median time to peak return after a dip event
• -34% median max drawdown within 1 year of dip event

Southwest Airlines Passes Basic Financial Quality Checks

Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.

Dip buying, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.