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JetBlue (NASDAQ: $JBLU) Soars After Activist Investor Carl Icahn Buys Stake

JetBlue Airways Corporation (NASDAQ: $JBLU)

JetBlue Airways Corporation (NASDAQ: $JBLU) is a leading low-cost American airline based in New York City. It has flights to over 100 destinations in North America, the Caribbean, and Europe, operating over 1000 flights daily.

JetBlue (JBLU) Stock Soars

JetBlue shares soared by 21.58% at the close of trading on Tuesday, February 13, 2024. The pump came after it was revealed that activist investor Carl Icahn had bought nearly 10% of the airline’s stock. JBLU shares were up by $1.31 to $7.38 per share at the close of trading.

Icahn’s acquisition was revealed via a regulatory filing on Monday, February 12, 2024. In the SEC filing, he stated that JBLU was “undervalued and represented an attractive investment opportunity.”

Icahn’s 9.91% stake in JetBlue makes him the third largest shareholder, behind Vanguard and BlackRock. As of Monday’s closing price, his stake was worth $204 million. After the Tuesday pump, the stake was worth $248.25 million at closing.

The price pump was a welcome relief for JBLU shareholders, as the stock has been trending downward since facing legal headwinds at the start of 2024. In the past six months, JBLU stock had lost 8.3% of its value compared to the overall 1.1% decline for airline stocks.

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Icahn Eyes Board Seat

The billionaire investor also revealed that he was in talks with the board and management about the possibility of a seat on the board. According to a Bloomberg report, the JetBlue board stated they were open to constructive dialogue with their investors as they “continue to execute our plan to enhance value for all of our shareholders and stakeholders.”

Icahn’s filing was made on the same day JetBlue’s former president and COO, Joanna Geraghty, took over as CEO. Her new position was announced last month.

Icahn started buying JBLU stock on January 26, 2024, a week after a federal judge blocked a proposed takeover of Spirit Airlines. Both companies have appealed the decision. However, in a January filing, JetBlue said it believed it could exit the deal based on the timelines agreed to in the deal. According to analysts, JetBlue might still go ahead with the merger at a lower price if allowed by the courts.  

JetBlue Reports Loss

In the fourth quarter fiscal 2023 results, released on January 30, 2024, JetBlue reported a net loss, as larger competitors reported bigger profits. The company had an adjusted net loss of $63 million for the fourth quarter and an adjusted net loss of $151 million for the full year. In its guidance, it sees revenue falling 5%-9% for the current quarter as it reduces capacity to cut costs.

According to the airline, it expects to approach breakeven in FY24, with capital expenditure of around $1.6 billion, aided by recent cost-cutting efforts. As for Spirit Airlines, some analysts believe it may not survive if it does not receive a capital injection soon.

JBLU Stock Forecast

Analysts give JBLU stock an overall hold rating. They forecast a high of $5.50 and a low of $3 for the stock in the next 12 months. Their average target for JBLU stock is $4.63, a 37.28% downside from the last closing price.

JetBlue Stock

Is JBLU Stock a Buy?

Most investors have opted to wait on the sidelines until the Spirits Airlines merger is resolved. The merger is crucial to JetBlue’s survival as it would bring in much-needed capacity and pilots.

However, the recent revelation that billionaire investor Icahn plans to join the board, could shake things up. He could inject capital into the airline, providing it with a lifeline. However, those negotiations could take weeks to conclude. For now, the hold rating accurately represents the stock’s future.

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