Just apply the usual formula: Share price = underlying value + hype.
Obviously - the underlying value will drop when the shares are diluted ... and no matter which historic measure you apply, (like e.g. NTA or current earnings capability) AIR's underlying value is already today (prior to dilution) ways below the share price.
If you look into the earnings potential, than you obviously need to predict the future earnings (which are unknown) and it depends on which future earnings you assume (anybody's best guess). However - one needs to be pretty optimistic to make the current share price look reasonable.
Leaves hype - Hype is driven by irrational but very strong human traits: fear and greed. Fear of missing out, the hope and expectation to always find a bigger fool and group think. Good examples for securities without any underlying value are cryptocurrencies - who would have thought that anybody pays $100000 for a mathematical construct with no underlying value and which can be replicated by others in unlimited numbers (Bitcoin)?
I'd put the current share price for AIR into the same category. Hard to understand, impossible to predict but hey - perception is reality. Great stuff for traders (particularly if they can predict hype ), but clearly no investment material.
I suspect it could be as simple as investors/punters thinking that if it is at $1.60-$1.70 through recent lockdowns and heavy restrictions in/out of Auckland, then going to be higher once they start flying back with the domestic network, and then even higher again once get back internationally. Ignoring all those peripheral things like govt loans, capital raises, cash burning, writedowns, fuel costs, inflation, risk of further outbreaks etc etc.
Not like its the only investment around divorced from fundamentals, priced on some utopian vision decades away and defying logic.......
Yeah belief (or unaware/ uneducated in these aspecvts0 leading to blind faith, and FOMO of hope SP will go higher after boarders open, all while missing all the real concerns that affect a business as you have summarised.
@FlyAirNZ
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“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
@FlyAirNZ
Is it just us or are we seeing double? 👀✈️ Welcoming the newest members of our Air New Zealand whānau, ZK-NHF and ZK-NHE. An exciting arrival as we #GetReadyForTakeOff 🌏
I think you have had one too many beverages on Sunday
Just keep spending capex...what could possibly go wrong MASSIVE capital raise coming in Q1 2022, they will need at least $1.5 Billion in my opinion.
Blast from the past....yeap, could easily go to $2 again after the next 5:1 share consolidation from 40 cents https://www.nzherald.co.nz/business/...20confusing%22.
Last edited by Beagle; 14-11-2021 at 08:45 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
Just keep spending capex...what could possibly go wrong MASSIVE capital raise coming in Q1 2022, they will need at least $1.5 Billion in my opinion.
Blast from the past....yeap, could easily go to $2 again after the next 5:1 share consolidation from 40 cents https://www.nzherald.co.nz/business/...20confusing%22.
On the other hand ... we heard already that other airlines are withdrawing capacity from the NZ market thanks to our government locking us still up while the rest of the world opens up.
This could be as well an amazing opportunity for AIR ... if they are the last plane flying to this part of the world, they can charge for the tickets whatever they like.
If you think about it - this is probably the reason for the disastrous MIQ policy ... locking us up until no other airline bothers anymore to fly to NZ and when they are all gone they can open up the borders and creaming the margins from any single ticket they sell.
Government just looking at its interests as major share holder and turning AIR into a monopoly.
Discl: just playing devils advocate ... not holding and no current plans to change this status.
----
"Prediction is very difficult, especially about the future" (Niels Bohr)
Shane Jones would have a LOT to say about any attempt at monopolistic pricing lol
The Govt are terrified on him getting back up on his soap box
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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Originally Posted by BlackPeter
), but clearly no investment material.
MASSIVE capital raise coming in Q1 2022, they will need at least $1.5 Billion in my opinion.
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