Market Overview

PreMarket Prep Stock Of The Day: Spirit Airlines

PreMarket Prep Stock Of The Day: Spirit Airlines

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Over a pleasurable Memorial Day weekend for most of the country, being outside and socializing with others lifted the spirits of many. And it lifted the broad markets as investors anticipate the economy's recovery from the COVID-19 crisis. 

The airline sector, which has been ravaged by the crisis and slow to rebound, was playing catch-up Tuesday, with the PreMarket Prep Stock of the Day leading the way: Spirit Airlines Incorporated (NYSE: SAVE). 

Spirit An Underperformer In 2019

While the S&P 500 index marched to a new all-time high in 2019 and continued into the early part of this year, Spirit went in the opposite direction. Following its 2018 year-end close of $57.92, it declined in October to $32.97 and rebounded to end the year at $40.31.

Spirit managed a small gain in January and was hovering at the $41 area before the bottom fell out Feb. 24, along with the S&P 500 index, falling from $41.10 to $37.46. It shed almost another $3 the following day to reach $34.71, and the major selling had yet to commence.

Spirit Loses Altitude 

While the S&P 500 index began to unravel quickly in late February and early March, Spirit overperformed on the downside. After its $34.71 low on Feb. 24, it did not find a bottom until March 19 at $7.01. That put the issue well below its post-May 2011 IPO low from August of $10.18.

While the index fell 35% from peak to trough, Spirit cratered 83%. From its all-time high in December 2014 ($85.35), it was off 93%.

Spirit's Sharp Rebound Off Low Fades Quickly

Only five days after bottoming at $7.01, the issue mounted a 166% rally on March 26, when it reached $18.68, but weakened to end that session at $16.51.

From that level, it made be a successful retest of the recent low, when it fell to $7.25 on May 14 and embarked on another rally.

A 'Buy Everything' Market

In Tuesday's market, there is some rotation out of the leaders and into the laggards, and Spirit definitely falls into the latter category.

After a much higher open, it had a brief retreat to $11.23 and was trading in the $12 handle at the time of publication, up 22.71% to $12.48. 

Spirit Moving Forward

If the reopening of U.S. and world economy goes according to the script the market has written so far, it's difficult to determine of amount of upside in Spirit and similar issues.

If it does not and Spirit begins to retreat, it may finds buyers ahead of its March low as investors who feel they missed the bottom attempt to accumulate the issue on weakness. 

Photo by Dustin Blitchok. 


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