Wheels Up stock price forecast: Hopes lost, crash landing ahead

By:
on Aug 11, 2023
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  • Wheels Up Experience share price is under intense pressure.
  • The company postponed its financial results and warned about its future.
  • It needs billions of dollars in investments to survive.

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Wheels Up Experience (NASDAQ: UP) stock price has faced significant turbulence as the company’s cash dwindles. The shares tanked by more than 16% on Thursday after it disclosed that it was running out of cash. It was trading at $1.31 on Friday, 99% below its all-time high.

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NetJets competitor is facing turbulence

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Wheels Up is one of the few companies that are seeking to disrupt the private jet market. It does this by making it possible for people to charter jets for short and medium-range flights. In most cases, the company makes its cheaper for people to fly privately.

Wheels Up competes with a few well-capitalized companies like NetJets and VistaJets. While Wheels Up is a popular company, it has struggled to become profitable, leading to persistent cash burn.

Now, the company has delayed its financials and warned that it could run out of cash soon. It is working with Jefferies Financial and Kirkland & Ellis to find alternative options, including asset sales.

The company said that it was working with Delta Air Lines (NYSE: DAL), which could provide some short-term financing. Despite this optimism, I believe that Wheels Up is a bankruptcy waiting to happen.

First, its losses have continued widening. In 2022, the company’s net loss jumped to over $555 million, up from the previous $150 million. It lost $100 million in the first quarter of the year. This means that the company will not be profitable any time soon.

Second, the company’s balance sheet is strained. It ended last year with over $585 million in cash and short-term investments and ended Q1 with $363 million. Therefore, Wheels Up needs millions – if not billions – in investments. I doubt whether anyone will provide these funds. Asset sales will also not be enough.

Third, the company is competing with some experienced and cash-rich companies like NetJets, which is owned by Warren Buffett.

Wheels Up stock price forecast

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Wheels Up

Conducting a technical analysis on Wheels Up is almost meaningless for now. As shown above, the stock has plunged from an all-time high of $150 to about $1.30. Along the way, investors have lost almost $3 billion.

In the long term, the Wheels Up stock price will likely plunge to zero as it runs out of cash. However, in the near term, as we saw with WeWork, there is a likelihood that the shares will surge as it gets popular among retail traders. 

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