spirited

Frontier's valuation in the IPO was about $4BB which translates to an enterprise value of $6.3BB. Spirit is at $3.5 Mkt Cap, with an enterprise value of about $6.5BB

Seems a little rich to have Frontier have the same value as Spirit. I would think Spirit is 1.5X as big, is better run (yes I am biased) and should have a larger value commensurate with all that.

Thoughts?

Halon1211

buy Frontier stock then?

spirited

I think that relative mismatch would imply Short F9, Long NK - but us puny retail guys cannot short new IPOs, and I am not gonna put more eggs in the NK basket since I already into them for over 7 digits (future earnings)

SO - I am gonna do nothing.
Other could be inclined to buy SAVE instead of ULCC.
If F9 valuation holds, NK could take a nice 50% jump from 37 to 57! YAY....
If NK valuation holds, F9 could drop 1/3 from 19 to 12 - I hope not

I think the LCC & ULCC will do better over the next few years. and both will do better - Just NK has more headroom...

TrojanCMH

I think it’s both. Spirit has always been an undervalued stock/company for whatever reason. Allegiant and now Frontier seem to be a little overvalued. Never really understood why if we are larger than either of those companies, beat them or come very close in basically every metric and yet they’re still valued over us. Maybe it’s a debt issue...

Excargodog

Seriously, you think there is an underlying reality to the market? Oh, there probably is, but it’s lost in the day to day variability of public opinion. On May 15 2020 SAVE closed at $8.01 per share. Since then there have been no major management changes, I doubt that NK has hired or fired or retired 200 people, and yet Friday it closed at $37.36.

It’s all opinion based - that’s why they call it a market - and opinion is driven as much by emotion as fact - probably more so. Oh, in the long run I think the underlying fundamentals govern it, but on any given day? Nope. Frontier as an IPO is new and shiny - not unlike shiny jet syndrome - and there is no good reason not to buy it. But it’s the flavor of the month. That’s not putting it down, it is GOOD for an IPO to get a healthy start, but fundamentally I think NK and F9 are six of one, half dozen of another. They use the same business model and in the current climate I think both will gain ground on the Big Three in domestic flying unless business flying rebounds quickly.. SWA will too, and from a higher baseline.

Aero1900

I believe that Frontier stock is a bit over valued

If you watched the Sun Country IPO, the stock popped 50% on day 1, while Frontier traded flat and actually lost a tiny bit. Huge difference, and I think it's mainly the price the ipo was set at.

I hold a large amount of SAVE most of which I bought around $10 to 15. If Frontier drops to the mid to low teens I'll buy, but otherwise I won't touch it.

And I'm holding my SAVE stock long term btw

spirited

Awesome! Good luck with the SAVE holdings.... Should continue to do well for you.

Excargodog

Probably not the best idea to put a lot of your retirement investments in the company you work for or even the industry you work in. It sort of sets you up for a single point failure. If it’s money you are just going to GAMBLE with that’s fine. If it’s money you are someday going to NEED a broader diversification is probably preferable. Just sayin...

MCDUmanipulator

Who said it was his retirement money?

Excargodog

Just making a comment - and gave both contingencies. But I’ve seen it happen, guys planning on retirement through ESOP purchases and their 401k in more company stock. That’s a plan that works until it doesn’t. But if he’s playing the market for $hits and grins, more power to him.