madmax757

Who plans on buying some ULCC shares ?

I am going to. Any other regular frontier APCers ?

PulledBreaker

Not on day one. Read the latest S-1/A amendment to get familiar with the common stock dilution. 30 million shares in the initial offering, with the company still holding 200 million shares. 13% of the total shares will be available to the open market. Hence the 4.3B valuation. Enterprise value, that's important. Any shares that the company decides to sell going forward, will dilute your investment. The company even warns investors about it.

The $19-21 price is a fantasy, we won't get our hands on the stock at that price. Look at how Sun County gapped up 50% at the open on IPO day to 36. Then it slowly declined to 31. Don't be that guy. I'm personally going to wait it out.

There is a reason the company is jamming this through on April 1st. Must be a record on how fast you can get a stock to market. The froth of the reopening trade is what they are targeting. Not to mention you won't get any dividend payouts until 2022. Let the robinhood IPO chasers get burned, then pick your entry point.

Cyio

Out of curiosity what do you think it will settle on?

BiffleBalls

This is the kind of insightful post that makes wading through the mud on these forums worth the time.

TrojanCMH

Depends what you think the company is worth. If you believe it is legitimately a $4.5 billion company then around $18-$19 a share is where it should be. If the market disagrees and thinks F9 is a $2.5 billion company then it will settle around $11 per share. There’s basically going to be 230 million shares and the value of all those shares will equal what the market ultimately thinks the company is worth. Personally I think $4.5 billion is crazy in this day and age, but who knows what it will settle at, if any of us really knew we wouldn’t be airline pilots.

PulledBreaker

The standard metric for stock valuation on the open market, is primarily earnings. Specifically P/E ratios. More importantly, FUTURE earnings and forward looking P/E ratios. Let's look at Spirit vs Frontier.

2019 Revenue:
Spirit 3.8B
Frontier 2.5B

2019 Net income available to shareholders:
Spirit 335M
Frontier 251M

So in 2019, Spirit's revenue was 1.3B more, yet only earned 84M more than Frontier. A mere 6% marginal income rate on huge revenue numbers. The average investor will ask themselves, why?

2020 Revenue:
Spirit 1.8B
Frontier 1.2B

2020 Net income available to shareholders:
Spirit (-428M)
Frontier (-225M)

In 2020, Spirit lost 200M more than Frontier on only 600M in additional revenue. Again, investors will scratch their heads and think, how did that happen?

This, although very basic math, is what the investing community will generally use to determine which ULCC is better positioned at earning profit efficiently. The stock price will ultimately reflect that.

TrojanCMH

So what do you think the stock will settle at? Basically nothing I said is wrong. If the market thinks frontier is worth 4.5 billion then that’s where it will settle. If they think it’s higher or lower it will move from there. But yes there are some more in-depth ways we can look at where this will end up, but in simple terms, it’s all going to depend on what the market thinks it’s worth.


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PulledBreaker

Unfortunately, I do not run the trading desk at Goldman. I'm better at running ECAMs. Anything I say would be a wild guess. It really depends on the overall sentiment of the "Frontier" brand, and Q2 guidance vs actual earnings. After the company has it's first earnings call, a trajectory will then be known.

Anything before that is pure speculation.

itsnotme

well if the trajectory remains the same, they’ve said they are cash flow positive this month (March) which is ahead of recent (end of February) rumblings that cash flow neutral wouldn’t happen until June. They’ll get that 150 million $ loan they’ve drawn plus the 31 million associated with payroll loans paid before the second week of April, much like Sun country did just last week

itsnotme

https://www.retailroadshow.com/prese...?presid=863924

worth a look if you are thinking about buying in or coming on as a new hire