Low-priced shares, often called penny stocks, represent a unique stock market segment. These are shares of companies that, for various reasons, have a market value of less than $5 per share. The last few years have seen many established brands in this category. Their stock prices are taking a hit and descending below this benchmark.
While some of these companies showcased resilience and recovered, others lingered in the low-price zone, raising concerns and speculations among investors. The overarching query that looms large is: What does the future hold for these stocks?
In a stable economic environment, there’s an inherent potential for any stock, including penny stocks, to experience growth. However, this growth trajectory is seldom linear and is influenced by a myriad of factors, both internal to the company and external market forces. Recovery from a slump, especially as significant as dropping to the penny stock category, requires time, strategic interventions, and, often, a bit of luck.
Penny Stocks: Success, Failures, & Opportunities For Traders
Take the case of Nio Inc. (NYSE: NIO), an electric vehicle company. It wasn’t an immediate turnaround after its shares took a nosedive to nearly $1. The company had to gradually navigate operational challenges, market competition, and investor sentiments to rebuild its stock value over a year.
In contrast, companies like AMC Entertainment (NYSE: AMC) and GameStop (NYSE: GME) had a different recovery narrative. Both were adversely impacted by the pandemic, with their traditional business models facing existential threats. However, a grassroots movement among retail investors, popularly known as the “Ape movement,” catalyzed their stock resurgence. This movement highlighted the power of collective investor action and the unpredictability of stock market dynamics.
As the global economy shows signs of recovery from the setbacks of 2022, keeping an eye on potential dark horses in the stock market is essential. Are there hidden gems among the current penny stocks that could offer significant returns in the future? Or are established companies at risk of falling into this category due to unforeseen challenges? Only time, coupled with astute market analysis, will reveal the answers.
Many companies reached penny stock status, though others have managed to maintain support above the $5 mark (for now). Today, we look at a popular airline, JetBlue Airways Corporation (NASDAQ: JBLU), as shares continue making new all-time lows this quarter. Will JBLU stock become a penny stock in 2023?
Will JBLU Stock Become A Penny Stock?
At the time of this article, shares of JetBlue stock were hovering around $5.31. Like other companies on any list of penny stocks, JBLU has been scrutinized for multiple reasons. One of which has to do with its recent financial performance. The company, notable for its pricing model, had been one of the best-performing airline stocks during the first half of the year. It reached fresh 52-week highs in July as travel spending seemingly picked up during the summer months.
But that would be the top of the heap, with the company failing to stay airborne since. Last month, JBLU stock began falling after reporting second-quarter earnings results. JetBlue beat earnings per share estimates, and sales came in line with expectations. Management also said the company remains on track to deliver a profitable year. However, lagging margins in some areas and downbeat guidance for Q3 weighed heavily on JBLU stock.
TD Cowen analyst Helane Becker said the outlook from JetBlue “is extremely disappointing” and that the company’s view didn’t mention further potential impact from the removal of PW1100G engines. “JetBlue is caught in the cross-hairs of slowing domestic leisure air travel demand, operating in some of the most constrained U.S. airports, and dealing with idiosyncratic distractions…Management will likely tout capacity redeployments, its handful of long-haul transatlantic offerings, and cost control initiatives but this will be [a] tough story to spin,” Becker said.
Adding to the troubles were reports that the company experienced system outages affecting bookings. The fallout or potential fallout might not be revealed until JetBlue reports third-quarter results.
JBLU Stock Forecast
Despite the latest earnings news, industry headwinds have impacted JBLU stock even more. Meanwhile, even when broader markets are trading higher, JBLU has shown relative weakness overall. There hasn’t been much optimism from the analyst community either:
- Susquehanna JBLU Stock Forecast: Neutral, $7 Price Target
- JPMorgan Chase JBLU Stock Forecast: Underweight, $6 Price Target
- Evercore ISI JBLU Stock Forecast: Underperform, $8 Price Target
- Deutsche Bank JBLU Stock Forecast: Hold, $7.50 Price Target
There’s a range of JBLU stock forecast prices and varying ratings. Analysts’ sentiment remains bearish as shares hover less than $0.50 away from the penny stock threshold. However, not a single firm has set a target below it yet.
Should You Buy CVNA Stock Right Now?
Is JBLU stock a buy right now, or should you avoid it at all costs? The chart above shows a clear trend for the stock over the last year. But at its lowest price in recent history, is there some value to extract from this beaten-down name?
Taking some clues from its latest earnings recap, there could be a few bright spots to keep in mind if you’re bullish on JetBlue Airways stock. Joanna Geraghty, JetBlue’s President and Chief Operating Officer, explained:
“Looking ahead, we are updating our full-year earnings outlook to reflect near-term headwinds related to the termination of the NEA, a challenging operating environment in the northeast and a greater than expected shift of pent-up COVID demand to long-haul international markets which is pressuring demand for domestic travel during the peak summer travel period. While we remain on track to deliver a profitable year and record revenue performance, we are taking action, including redeploying capacity to mitigate these current challenges and improve margins.”
Short-term pain for long-term payout? That is something yet to be seen. However, JetBlue isn’t unique in its current state. With higher rates, record inflation, and other headwinds in the stock market today, plenty of companies are working to streamline operations as stock prices slump.
How To Find Penny Stocks To Buy
Is JetBlue going out of business? While the collapse of JetBlue stock has happened over the last few months, that has yet to be determined. But knowing how to handle headline risk, no matter which types of stocks you’re buying is important.
Data can give some insight into the market potential of certain companies. But there’s no substitute for education. Learning to trade is more valuable than finding the next penny stock picks from a random social media account.
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