I find the stock market an amazing place, where both institution investors and private investors believe they have a systematic approach to investing and try to predict the market with target prices and time the market to decide when to buy and sell stocks. However, history has proven to us again and again that nobody has the gift of prophesy in the stock market.
Despite that, let me try and be a prophet and predict how Singapore airline (SIA- C6L) is going to do. The latest price of Singapore airlines is $4.86. This is a mere 5.26% decline from 1 month ago. If we look at the price trend, it was languishing at about $3.50 for most of 2020 due to massive losses during the COVID-19 period.
The price of the stock then steadily rose to about $5.50 around march 2021 in view of exuberance that COVID seem to be relenting and that air travel is going to be possible on a wider scale again. Of course, the latest outbreak in COVID-19 cases in Singapore and the bursting of the air travel bubble with Hong Kong makes it clear that air travel doesn’t seem to be resuming soon. Even if the bubble do take flight, it will be at least 2-3 years before SIA can be profitable again, let alone recuperate the losses over these 2 years.
So for the people who are buying the stock at almost $5 on exuberance, I would suggest extreme caution. It will likely be years of languishing before SIA can reap any proper profits, and that’s provided there are no new variants of COVID that grounds the flights.
For those who insist on but SQ, here are some silver linings. The Air freight division has increased business of 2.7 billion. That’s a 38% increase from the previous year. All in all, my take on SIA. Sell if possible. Hold if you are nationalistic and plan to hold the stock for 10 years or more. 🙂