Think It's Too Late to Buy United Airlines Stock? Here's Why There's Still Time.
Despite the recent decline in the share price of United Airlines (NASDAQ: UAL), the stock is still up 69% over the last year. However, there's more room to run, and even the latest news of a slowdown in bookings shouldn't shake long-term investors out of the stock.First, it's worth acknowledging that United Airlines, like most airline stocks, is volatile and often traded on momentum. This is due to the delicate relationship between its margins and demand/supply conditions.Airlines tend to have relatively high fixed costs, so they have pricing power when booking demand exceeds capacity, and revenue expands, leading to margin expansion. Unfortunately, the reverse is true, and all it takes is a slight downturn in demand to lead to margin pressure.Continue reading
Despite the recent decline in the share price of United Airlines (NASDAQ: UAL), the stock is still up 69% over the last year. However, there's more room to run, and even the latest news of a slowdown in bookings shouldn't shake long-term investors out of the stock.
First, it's worth acknowledging that United Airlines, like most airline stocks, is volatile and often traded on momentum. This is due to the delicate relationship between its margins and demand/supply conditions.
Airlines tend to have relatively high fixed costs, so they have pricing power when booking demand exceeds capacity, and revenue expands, leading to margin expansion. Unfortunately, the reverse is true, and all it takes is a slight downturn in demand to lead to margin pressure.
