Showing posts from May, 2020

Square: Not Pricing In Q2 Weakness

Square rallies near yearly highs after Q1 results. The company should report a large decline in Q2 payments volumes and an EBITDA loss. The stock trades at an insane 65x normalized EBITDA targets that are unlikely to be obtainable even in 2021. Despite the obvious long-term impact of the coronavirus to  Square  ( SQ ) small business customers, the stock is now back close to yearly highs. The company faces a tough road ahead with a material impact to business in the current quarter and a questionable future. My  investment thesis  was bullish on a rebound at the lows near $40, but the stock is no longer appealing above $75. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

American Airlines: Breathing Room

American Airlines has over $17 billion in liquidity to survive the current air passenger traffic crash. The company has billions in unencumbered assets and a very valuable loyalty program as additional collateral for more funding. May 8th passenger traffic was up over 25% to the highest level since March 25. The market continues to misunderstand daily cash burn rates making the stock a buy at $10. The story of the day for  American Airlines Group  ( AAL ) is that the airline now has breathing room. With the government aid, the company has the liquidity to survive as passenger traffic continues to grow on a weekly basis even faster than ridesharing. The market remains highly fearful due to negative headlines such as Warren Buffett selling shares, but my  investment thesis  is even more bullish here. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details.