LUV Lost 19% In A Month. Do You Buy Or Wait?
Southwest Airlines (LUV) stock is down 18.5% in 21 trading days. While history suggests price dips recover, there is risk – specific to profitability and downturn resilience. Consider the following data:
- Size: A $17 Bil company with $28 Bil in revenue currently trading at $30.72.
- Fundamentals: Last 12 month revenue growth of 3.2% and operating margin of 1.8%.
- Liquidity: Has Debt to Equity ratio of 0.5 and Cash to Assets ratio of 0.2
- Valuation: Currently trading at P/E multiple of 31.1 and P/EBIT multiple of 19.0
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 69.2% within a year. See LUV Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for LUV, see Buy or Sell LUV Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and LUV drops another 20-30% to $21.50 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Southwest Airlines (LUV) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: LUV provides scheduled passenger air transportation services across the U.S. and nearby international markets, operating a fleet of 728 Boeing 737 aircraft serving 121 destinations.
- Is The 21% Drop In LUV Stock, A Buying Opportunity?
- After A 21% Slide, Is LUV Stock Worth A Look?
- LUV Stock Down -18% after 5-Day Loss Streak
- LUV Lost 12% In A Week. Past Slides Turned Into Crashes.
- S&P 500 Movers | Winners: UAL, DAL, LUV | Losers: AXON, PTC, FTNT
- How Will Southwest Airlines Stock React To Its Upcoming Earnings?
2022 Inflation Shock
- LUV stock fell 65.3% from a high of $64.10 on 6 April 2021 to $22.23 on 31 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $37.70 on 14 July 2025 , and currently trades at $30.72
| LUV | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -65.3% | -25.4% |
| Time to Full Recovery | Not Fully Recovered days | 464 days |
2020 Covid Pandemic
- LUV stock fell 59.2% from a high of $58.54 on 13 February 2020 to $23.87 on 15 May 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 24 February 2021
| LUV | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -59.2% | -33.9% |
| Time to Full Recovery | 285 days | 148 days |
2018 Correction
- LUV stock fell 33.0% from a high of $66.29 on 2 January 2018 to $44.40 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
| LUV | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -33.0% | -19.8% |
| Time to Full Recovery | Not Fully Recovered days | 120 days |
2008 Global Financial Crisis
- LUV stock fell 69.8% from a high of $16.60 on 8 August 2007 to $5.01 on 5 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 24 October 2013
| LUV | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -69.8% | -56.8% |
| Time to Full Recovery | 1694 days | 1480 days |
Worried that LUV could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.