Delta Stock Price Slides 2% As Buffett’s Berkshire Unloads Shares

Delta Stock Price Slides 2% As Buffett’s Berkshire Unloads Shares
Written by:
Michael Harris
6th April, 16:56
  • Berkshire Hathaway offloaded 18% of its stake in Delta for $314 million
  • Buffett’s company also sold around 2.3 million shares of Southwest Airlines for around $74 million
  • Stock price trades 2% lower, near the 6-year low of $19.10

Shares of Delta Air Lines (NYSE:DAL) trade around 2.5% lower in New York today after it was reported that Warren Buffett’s Berkshire Hathaway (NYSE:BRK) sold 18% of its stake in the airline.

Fundamental analysis: Buffett unloads, revenue expected to plummet

According to SEC filings, Berkshire reduced its stake in Delta by 18% for $314 million, selling the stock in the price range of $22.96 and $26.04 per share. Delta stock price currently trades just below the $22 mark.

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The sale came in just around the same time as Delta’s CEO Ed Bastian warned that his company needs $60 million a day to get through,& as revenue is expected to collapse by 90% in the second-quarter.

“Delta is burning more than $60 million in cash every day, we know we still haven’t seen the bottom,” Bastian wrote in a memo to employees. “Without the self-help actions we are taking to save costs and raise new financing, that money would be gone by June.”

In addition to offloading Delta’s shares, Berkshire also sold around 2.3 million shares of Southwest Airlines for around $74 million on Thursday.

Berkshire Hathaway now owns 59 million shares of Delta. Still, CEO Bastian is upbeat despite the first quarter of 2020, which was “unlike any quarter in Delta’s history”.

“On Saturday we had about 38,000 customers flying, versus our normal late-March Saturday of 600,000,” said Bastian before warning that Delta still hasn’t “seen the bottom”.

“We continue to shrink our network as demand falls and will operate just enough flying to maintain essential services. This month our schedule will be at least 80 percent smaller than originally planned, with 115,000 flights cancelled.”

Technical analysis: Bears have the new multi-year lows in sight

Despite the bounce that occured in the Delta stock price two weeks ago, shares of the carrier rotated lower again to trade near 6-year lows around the $20 handle, despite the price of $60 per share in February.

Delta stock monthly chart (TradingView)

You can see in the chart that the price action stopped at the ascending trend line (the red line), which connects the lower highs from the last decade. If broken, the major support block is located around the $15 handle, while the bulls will be targeting $32.50 on any attempt to correct higher.

Summary

Shares of Delta have slid 2% today after reports over the weekend that Buffett’s Berkshire sold 18% of its stake in the carrier for $314 million. Delta stock price now trades around the $20 handle again as the sellers eye a trip towards $15 in the coming days and weeks.

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