Is Wheels Up Experience a Buy Under $5?

: UP | Wheels Up Experience Inc. News, Ratings, and Charts

UP – Wheels Up Experience (UP) is the first publicly traded private aviation company. However, despite reporting a 55% year-over-year rise in revenues in the last quarter, the stock has declined 43.1% over the past month. Currently, trading under $5, is UP an ideal investment now? Read more to find out.

 Membership-based private aviation company Wheels Up Experience Inc. (UP) made its stock market debut via the SPAC merger on July 14, 2021. It is the first publicly-traded private aviation company. It merged with blank check company Aspirational Consumer Lifestyle Corp. to raise $790 million in cash proceeds, giving UP an enterprise valuation of $2.10 billion. UP Founder and CEO Kenny Dichter expects UP to “look like Uber and Airbnb” of private aviation. UP has access to 1,200 airplanes through a third-party network at the time of its stock market debut, out of which 170 are directly owned or leased by the company. However, shares of UP have slumped 56.4% since its stock market debut to close yesterday’s trading session at $4.33.

Here’s what could shape UP’s performance in the near term:

New Variant and Travel Ban

The rapid spread of the highly transmissible Omicron variant has resulted in the reimposition of travel restrictions in the United States and worldwide. With nearly a third of the U.S. states detecting the virus, several new requirements for travel have been imposed, such as vaccine certificates and day-old negative COVID-19 tests. Moreover, the blanket travel ban has been reimposed on U.S. citizens and foreign passengers from eight African countries. Thus, the aviation industry is expected to remain under pressure this holiday season.

Declining Profit Margin

UP’s revenues increased 55% year-over-year to $301.98 million in the fiscal third quarter ended September 30, 2021. This can be attributed to a 52% rise in live flight legs and a 29% rise in active users. However, adjusted EBITDA loss worsened 198% from the same period last year to $23.93 million. Net loss came in at $59.46 million, reflecting a 389% year-over-year decline from the positive year-ago value.

Despite the utilization of $51.60 million funding received from the CARES Act, UP’s net loss increased by $80 million due to decreased adjusted contribution margin and a rise in operating costs.

Increasing Prices

UP has raised its King air and light jet pricing in the range of 8% to 13%. Moreover, new Connect and Core members that deposit $100,000 or less must wait at least 90 days to fly. Also, members who deposit $200,00 can schedule flights at their convenience immediately, but not on peak days. Only members that deposit $400,000 or more can fly at their will.

POWR Ratings Reflect Bleak Prospects

UP has an overall rating of D, which equates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

UP has a grade of D for Momentum and Sentiment. The stock is currently trading below its 50-day and 200-day moving averages of $6.43 and $8.66, respectively, indicating a death-cross trend in sync with the Momentum grade. In addition, analysts expect UP’s EPS to remain negative until at least 2022, justifying its Sentiment grade.

Of the 30 stocks in the F-rated Airlines industry, UP is ranked #27.

In addition to the grades I’ve highlighted, you can view UP ratings for Stability, Quality, Value, and Growth here.

Bottom Line

UP is a leading player in the private aviation industry and has witnessed a steady rise in demand since the onset of the pandemic, as the rich opted for private flights due to the masking mandates and other restrictions of commercial flights. In fact, 80% of UP’s customers who previously flew commercial have switched to private flights. However, despite being an industry leader, the company’s negative profit margins are a cause for concern. Given the reimposition of the travel ban, as the Omicron COVID-19 variant spreads globally, UP’s financials and profit margins might decline further in the near term. Thus, the stock is best avoided now.

How Wheels Up Experience Inc. (UP) Stack Up Against its Peers?

While UP has a D rating in our proprietary rating system, you might want to consider taking a look at its industry peers, SkyWest, Inc. (SKYW) and Mesa Air Group, Inc. (MESA), which have a B (Buy) rating.

 


UP shares were trading at $4.42 per share on Tuesday afternoon, up $0.09 (+2.08%). Year-to-date, UP has declined -55.67%, versus a 26.39% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
UPGet RatingGet RatingGet Rating
SKYWGet RatingGet RatingGet Rating
MESAGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

2022 Stock Market Outlook

The stock market (SPY) continued on its bullish path in 2021. Will that continue in 2022? And what could happen to awaken the bear market from hibernation? 40 year investment veteran Steve Reitmeister explores this and more in his “2022 Stock Market Outlook” which includes his top 12 stocks for the year ahead. Read on for full details below...

:  |  News, Ratings, and Charts

3 Chip Stocks to Buy Now that Power the Metaverse

The term ‘metaverse’ is the latest tech buzzword on everyone's lips. Investors seem excited about the potential it holds, and tech giants continue to invest heavily to develop metaverse. Given this backdrop, we think it could be wise to add quality semiconductor chip stocks NVIDIA (NVDA), Intel (INTC), and Micron Technology (MU) because they are likely to play a significant role in metaverse infrastructure. Read on.

:  |  News, Ratings, and Charts

100 Best Stocks for 2022

2022 is a key year for investors. The easy money from the start of the current bull market via the S&P 500 (SPY) has already come and gone. Now gains for the average investor will slow down...but who wants to be average? The path to outperformance just became easier with our listing of the 100 best stocks for 2022. Get full details below...

:  |  News, Ratings, and Charts

Looking for Value in the Tech Sector? Check Out These 4 Stocks

Tech stocks stumbled in the first trading week of this year over investors’ concerns about the looming interest rate hikes. Although a rising interest-rate environment does not bode well for technology companies, experts believe high demand for tech solutions will more than offset the negatives. So, we think it could be wise to bet on undervalued tech stocks International Business Machines (IBM), HP (HPQ), NortonLifeLock (NLOK), and Cirrus Logic (CRUS). Read on for more details.

:  |  News, Ratings, and Charts

100 Best Stocks for 2022

2022 is a key year for investors. The easy money from the start of the current bull market via the S&P 500 (SPY) has already come and gone. Now gains for the average investor will slow down...but who wants to be average? The path to outperformance just became easier with our listing of the 100 best stocks for 2022. Get full details below...

Read More Stories

More Wheels Up Experience Inc. (UP) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All UP News