US Airways to sell 19M shares to Merrill Lynch
- Thread starter JayBrian
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It knocked about 8% off the share price and may be a signal that airline stocks are reaching their short term peak. On the other hand, it probably insures that they will have enough cash to make it through next summer.
flybynite
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As Martha would say...."It's a good thing."
28L_or_10R?
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The additional stocks caused dilution. The resulting drop set off the sale of shares that had stops set thus selling people's shares automatically while they were at work or whatever. 😱 I bought LCC shares at that point and I am slightly ahead at the end of the day. My United shares are making me very happy. Currently, airline stock prices are based on the price of oil and not fundamentals such as future bookings, etc. To celebrate today's good fortune, I am starting on a bottle of Merlot.
servered wings
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It is good you are celebrating the success of your stock investments. The dilution of shares is not a good thing. It devalues the stock overall just like printing more dollars, devalues the dollar. The more there is - the less it is worth. This is a serious issue which has to do with the "cash burn" of the company. Halting the sale of stocks is rarely a good thing.
Fuel costs, as with US, will eventually take its toll on your prized United shares eventually.
28L_or_10R?
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Don't worry about it. Just put your pennies in your piggy bank and I'll take care of things on my end.
servered wings
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It's a matter or survival, said Joe Blankenship, vice president of research at Scottsdale investment firm Source Capital. "Obviously the airline needs cash to keep operating."
http://news.moneycentral.msn.com/ticker/ar...&Symbol=LCC
"They're burning cash at a significant rate," Blankenship said. The stock offering will keep US Airways "in the air" for now, he said.
It is not a matter of putting pennies in a piggie bank. Jobs are at stake and consumer choices will become smaller with consolidation. It is not a matter of you and me - but the financial stability of thousands of workers, as well as consumers. Devaluation/dilution, whatever you want to call it, is cause for concern. Maybe not if you "shorted" the stock.. but to those that have long term investment in the company's viability as well as, all airlines that will/are suffering the consequences of extreme fuel costs.
nycbusdriver
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servered wings
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Overscribed - Term used to describe a new stock issue in which the buyers want more shares than are available.
Good news it means that US Airways had more buyers at the sale price of $8.50. And the option to sell more stock was exercised.
Remember Merrill Lynch was not the buyer of the stock but the underwriter of the sale.
Good and bad news for US Airways - more cash on hand. More shares increase dilution.
Good news it means that US Airways had more buyers at the sale price of $8.50. And the option to sell more stock was exercised.
Remember Merrill Lynch was not the buyer of the stock but the underwriter of the sale.
Good and bad news for US Airways - more cash on hand. More shares increase dilution.
28L_or_10R?
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I believe that you misunderstand what I am doing. This is not a stock like your grandfather bought, put in a lockbox, and opened years later hoping that it would bring a juicy retirement. This is an hour-to-hour maybe day-to-day investment for me. I start my morning before opening bell with breakfast, get the coffee brewing, and turn on CNBC for mood. I start looking at oil prices, natural gas prices, economic data, etc. Upon opening bell, I stare at real-time charts until my eyes are bloodshot. Everything is under control. My finger is on the SELL button if things look like they will go south.
Granted, this dilution would suck if I had been holding LCC stock but I bought it afterwards. But that is the market. Win some, lose some.
