Spirit Airlines Faces Turbulent Future Amid Bankruptcy and Delisting Concerns

Technical Analysis

Spirit Airlines, Inc. (SAVE) ended its last trading session on November 18, 2024, with its stock priced at $1.0775, showing no movement for the day within an unusually narrow range, as this was both the low and high. This stasis suggests an impending significant move, corroborated by the Relative Strength Index (RSI) at 30, which indicates the stock is oversold. The 50-day and 200-day moving averages at $2.27 and $3.57, respectively, illustrate a severe bearish trend, with the stock trading well below these averages. The Average True Range (ATR) is not meaningful given the current price level and suggests recent extraordinary volatility likely linked to significant corporate events. Resistance is noted at $1.31, providing potential direction upon recovery.

On the volume front, Spirit Airlines’ volume of 24.58 million far surpassed its average of 12.39 million, indicative of increased trading interest, coinciding with NYSE’s decision to delist the stock and recent bankruptcy filings. The MACD shows a positive divergence, hinting at potential bullish momentum in the short term, although this may not materialize given the severe underlying challenges.

Fundamental Analysis

Spirit Airlines is grappling with substantial operational and financial challenges, as evidenced by its negative EPS of -$6.20 and a negative PE ratio of -0.17. This poor financial health is underscored by the company filing for Chapter 11 bankruptcy, a drastic step that often precedes restructuring or liquidation. The company's market capitalization is now a mere $118.28 million, reflecting diminished investor confidence and deteriorating asset value.

The recent news highlights Spirit's strategic missteps and failed mergers, leading to the turnover of control to bondholders. Despite entering Chapter 11 with bondholder support and plans to continue operations, these developments cast a shadow over any intrinsic value assessments. Initiatives to revitalize the company will likely be met with skepticism until tangible improvements in financial health and strategic direction are evident.

Short-term Outlook

For the next trading day and the upcoming week, Spirit Airlines' stock performance is likely to be volatile as it responds to bankruptcy proceedings and delisting pressures. The cessation of trading on the NYSE adds uncertainty about short-term accessibility and liquidity. Investors should brace for continued downward momentum until there’s clarity on restructuring outcomes.

Long-term Investment Potential

Long-term potential is murky due to financial instability, debt obligations, and failure in merging strategies. The company’s focus on restructuring and a potential shift in control to more resourceful management may offer a path to recovery, but the risk remains high. Intrinsic value is difficult to determine at this stage given the prevailing negative earnings and market conditions.

Overall Evaluation

Given the current conditions, Spirit Airlines, Inc. (SAVE) is evaluated as a 'Sell' candidate. The bankruptcy proceedings and NYSE delisting significantly impair investment prospects, casting doubt on short- and long-term recovery without substantial operational and financial restructuring. Potential investors should consider the elevated risk and uncertainties that lie ahead despite an existing 'Buy' consensus from analysts, likely dated prior to recent developments. The stock demands cautious monitoring until clearer evidence of turnaround emerges.