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Summary
- Stocks of American Airlines Group Inc surged by more than nine per cent despite reporting record annual losses in its latest financial results on Thursday.
- The spike came after day traders’ forum on Reddit, WallStreetBets, mentioned the stock in their chatroom.
- The aviation company reported a 64 per cent year-over-year decline in its revenue of US$ 4 billion for the fourth quarter of 2020.
Stocks of American Airlines Group Inc (NASDAQ:AAL, AAL:US) surged by more than nine per cent despite reporting record annual losses in its latest financial results on Thursday, January 28. The spike came after day traders’ forum on Reddit, WallStreetBets, mentioned the stock in their chatroom.
Even as the company posted an uncertain industry outlook for 2021, the heavily shorted stocks of American Airlines rose by over 31 per cent to a day high of US$ 21.77 on Thursday. Though the scrips gradually dwindled to close trading at US$ 18.1, investors believe that the gains were likely motored by a Reddit chatroom-triggered short squeeze.
The latest spike pulled AAL’s year-to-date levels to a growth of 15 per cent.
Let’s take a closer look at American Airlines’ financial results which the company announced on Thursday.
American Airlines Group (NASDAQ:AAL, AAL:US) Latest Financial Results
The aviation sector around the globe continues to burn through millions of dollars as it wades through various pandemic-triggered travel measures and bans. Like most of its rival airlines, American Airlines’ projection for year 2021 was soaked in uncertainty in terms of rebound in passenger demand.
The aviation company reported a 64 per cent year-over-year (YoY) decline in its revenue of US$ 4 billion for the fourth quarter ending 31 December 2020, as well as a 53 per cent YoY reduction in its total available seat miles (ASMs).
©Kalkine Group 2021
American Airlines’ net loss for Q4 2020 stood at US$ 2.2 billion, while its full-year net loss for 2020 was US$ 8.9 billion. It ended its fourth quarter with about US$ 14.3 billion in available liquidity, and predicted the number to rise to US$ 15 billion in total by the end of Q1 2021.
Describing 2020 as its “year of recovery”, American Airlines noted that the rebound in its passenger strength will depend on the swiftness of COVID-19 vaccine rollouts and the easing of travel measures.
It is likely not possible to know for sure what boosted American Airlines’ latest stock surge in spite of record revenue drop in its latest financial report. But the jump is being attributed to retail traders communing on Reddit forums as the group has been known to propel shorted stocks like GameStop and AMC Entertainment to glory in the past week.
