Investors who owned stocks since 2016 generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return in the past five years is 121.6%. But there’s no question some big-name stocks didn’t keep pace along the way.
United’s Difficult Journey: One market laggard of the past five years was United Airlines Holdings Inc (NYSE: UAL).
United started 2016 trading at around $56. After dropping to as low as $37.41 in mid-2016, United shares started to gain altitude once again.
United made it above $75 by the end of 2016 and climbed as high as $97.85 by mid-2018.
United and other airline stocks had historically struggled with profitability in the past. However, investors had grown optimistic about a number of changes the airlines had made to improve their profitability. United reported $3 billion in net income in 2019, up from $2.1 billion in 2018.
Unfortunately for United investors, a slow descent for the stock transitioned to nosedive in 2020 as the entire global travel industry completely shut down.
United In 2021, Beyond: United shares plummeted from above $85 in early 2020 to as low as $17.80 in March. The sharp sell-off came in large part because investors were concerned the airlines would not be able to survive the steep losses of global travel shutdowns without being nationalized. United reported losses of at least $1.6 billion in each of the first three quarters of 2020.
The government stepped in with dedicated airline bailout packages that would allow them to remain independent, however, and United shares have since recovered to above $43 per share.
Unfortunately, given all the 2020 pandemic chaos, United investors who bought back in 2016 and held on through all the volatility have little to show for it. In fact, $1,000 worth of United stock bought in 2016 would be worth about $961 today, assuming reinvested dividends.
Looking ahead, analysts expect United to trade mostly sideways in the next 12 months. The average price target among the 21 analysts covering the stock is $45, suggesting just 2.6% upside from current levels.
(Photo: United Airlines)
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