Ten cents would put the market cap at nearly a bil
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Posted On: 02/24/2017 9:24:51 AM
Ten cents would put the market cap at nearly a billion dollars. That is a stretch, and if it does reach .10, it will be after certification. But it's not that far away. Here's a comparison of what we might trade at post-certification:
- American (AAL) is trading at 9x net income of $2.6 billion; their market cap is $23 billion.
- Delta is trading at $37 billion with net income of $4.3 billion, right about 9x earnings.
- Southwest Airlines is trading at $34 billion with net income of $2.2 billion, ~15x.
We can expect this company, once it has a mature fleet, to trade similarly to its competitors. Luckily, every single plane will be profitable after the first few months of operations post-certification. But before that, we should expect a more generous trading multiple of 20-30x to factor in the company's startup status. So if we can earn $20-30 million in profit during the first year, I wouldn't be surprised to see a market cap of 900 million, especially now that Warren Buffet is making airlines an exciting investment...
The company very well may be at $500 million (I agree with LT's prediction of .05) when we get the certification, perhaps higher. That's at least 20x higher than where the market cap is now. In other words, every dollar invested today has a high likelihood of becoming $20 when we're certified this year.
- American (AAL) is trading at 9x net income of $2.6 billion; their market cap is $23 billion.
- Delta is trading at $37 billion with net income of $4.3 billion, right about 9x earnings.
- Southwest Airlines is trading at $34 billion with net income of $2.2 billion, ~15x.
We can expect this company, once it has a mature fleet, to trade similarly to its competitors. Luckily, every single plane will be profitable after the first few months of operations post-certification. But before that, we should expect a more generous trading multiple of 20-30x to factor in the company's startup status. So if we can earn $20-30 million in profit during the first year, I wouldn't be surprised to see a market cap of 900 million, especially now that Warren Buffet is making airlines an exciting investment...
The company very well may be at $500 million (I agree with LT's prediction of .05) when we get the certification, perhaps higher. That's at least 20x higher than where the market cap is now. In other words, every dollar invested today has a high likelihood of becoming $20 when we're certified this year.
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