Common Cents purchased LUV at $32.5 during a steep intraday decline on July 1. The decline was related to news of a probe into price collusion by the major airlines.
Common Cents Take: LUV just can't win. Analysts lower earnings estimates on fears that the airline companies will increase competition, which will lower ticket prices and profits. Then, the Department of Justice (DOJ) announces that it is launching a probe for not lowering ticket prices. Since when is it a requirement to proactively reduce profits? Doesn't the market (we ticket buyers) control that?
Going forward, Common Cents will look to sell the recently purchased shares near $35.50, as the position is now larger than the target allocation.
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