easyJet’s share price tumbles 19% this year! Is now the time to buy?

These are challenging times for the easyJet (LSE: EZJ) share price. The low-cost airline plummeted in September after announcing a £1.2bn rights issue to boost its balance sheet after rebuffing a takeover attempt. It’s recovered ground since then but remains 19% lower in 2021.

Sure, easyJet’s share price has gained 33% in price on a 12-month basis. But last October it seemed like the walls were closing in on the FTSE 250 airline. The global travel industry was shut down and a breakthrough on a Covid-19 vaccine remained elusive. It’s no surprise then that the share price is higher today than it was a year ago.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

However, easyjet isn’t out of danger just yet. Should I avoid the low-cost airline like the plague? Or should I use recent share price weakness as an opportunity to buy?

Big ambition

At last month’s rights issue, easyJet said that the fundraising would give it extra protection in case the coronavirus crisis drags on. But the orange-liveried airline didn’t adopt a solely defensive tone. It added that it has “the flexibility to take advantage of long-term strategic and investment opportunities expected to arise as the European aviation market emerges from [the] pandemic.”

The attempted takeover of easyJet (reportedly by Hungarian operator Wizz Air) illustrates how ripe the market is for consolidation right now. The low-cost travel sector is expected to lead the recovery in the broader aviation market. So it’s not a shock that the strongest operators are making attempts to bolster their position. Analysts have tipped the budget segment to expand at a compound annual growth rate of almost 5% over the next five years.

Rumours abound that easyJet is eyeing up British Airways’ slots at Gatwick if its revived hopes to launch a cheaper airline at the London airport crash. The firm has also talked about expanding its presence in places like Amsterdam, Milan and Berlin in its bid to build “a network of key cities to broaden the Group’s presence across Europe.” Progress on these plans could help the easyJet share price soar beyond its pre-pandemic levels.

Why I fear for easyJet’s share price

I certainly think buying shares in low-cost airlines could be an investing masterstroke. I just don’t think that easyJet is the best way to go about this. For example, Ryanair and Wizz Air are in a much stronger financial position to survive Covid-19 and capitalise on the market opportunities thereafter. By comparison, easyJet remains swamped with debt (£2bn worth as of June).

I’m also concerned that easyJet isn’t raising flight capacity at the same rate as those industry rivals. Indeed, it expects capacity of 60% between October to December versus two years earlier. That’s only fractionally better than the 57% it recorded in the previous quarter. And of course a surge in the number of Covid-19 cases over the winter could put these modest expectations in danger and cause havoc further out. I think the easyJet share price remains under serious threat and would rather invest in other UK shares today.

Inflation Is Coming: 3 Shares To Try And Hedge Against Rising Prices

Make no mistake… inflation is coming.

Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.

Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.

That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…

…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!

Best of all, we’re giving this report away completely FREE today!

Simply click here, enter your email address, and we’ll send it to you right away.


Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Wizz Air Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

This post was originally published on Motley Fool

Financial News

Daily News on Investing, Personal Finance, Markets, and more!