Alaska Air Group has weathered a volatile period marked by notable shifts in investor sentiment and pivotal business developments.
After a remarkable streak of five consecutive weeks of gains, investors took a sharp turn, precipitating a 10% drop in the company’s shares last week. This decline compounds a year-to-date decrease of 16.74%, positioning the stock for a potentially challenging second year in negative territory.
Recent headlines have been dominated by Alaska Air Group’s strategic move to acquire Hawaiian Airlines. The agreement, valued at $929.4 million in equity, promises an expanded network and increased travel options for passengers, propelling both companies into the spotlight. This acquisition forecasts promising prospects, especially in the lucrative Asia Pacific market, where Alaska aims to expand its foothold. Simultaneously, Hawaiian Airlines’ clientele gains access to non-stop travel to the U.S. mainland.
However, despite these strategic strides, Alaska Air Group’s latest financial performance fell short of Wall Street’s expectations in its recent earnings report. While operational excellence persisted with a stellar 99.7% completion rate (leading the industry), revenue slightly missed forecasts by 1.14%, recording $2.84 billion, while earnings per share at $1.83 fell short by 1.90%. Nonetheless, the company’s net income soared significantly, demonstrating impressive growth driven by reduced operating expenses, reflecting positively on its profitability measures.
Technical
Alaska Air Group’s share price trajectory has remained entrenched in a downtrend, notably below the 100-day moving average within the daily timeframe. Early in December, a significant gap down initially occurred but was partially recovered as upside volumes surged, propelling the share price higher.
Establishing a notable support level at $30.75 per share, notably after the third-quarter earnings release, the share price experienced a sharp surge. However, the subsequent uptrend faltered at the $39.73 per share level, prompting a downturn that formed the gap down. Recent trends indicate waning upside volumes juxtaposed against rising downside volumes, potentially indicating a forthcoming continuation of the downtrend after a minor rebound.
The $30.75 per share level emerges as a significant point of interest should the downside momentum persist. Conversely, successfully filling the gap could signal an upward trajectory, with the $39.73 per share level becoming a potential point of interest for buyers. The share price’s consolidation within a rectangular pattern may foresee a breakout on either side, and a high-volume move in the breakout direction could trigger an extended price move, indicating a potential shift in market sentiment.
Summary
Alaska Air Group navigates a pivotal phase amidst market turbulence and strategic acquisitions. Despite a recent share price setback, marked by a decline of 16.74% year-to-date, the company’s bold acquisition of Hawaiian Airlines promises to amplify travel options. Operational excellence shines, albeit falling slightly short of Wall Street’s forecasts. The share price’s technical trajectory hints at a potential rebound, with key support levels and a pattern breakout signalling possible shifts in market sentiment.
Sources: Alaska Air Group, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.
