Shares of airline company Spirit Airlines, Inc. SAVE were increasingly volatile on Thursday, hitting new 52-week lows after rumors of restructuring options being explored.
One well-known internet and sports personality bought shares of the struggling airline company, only to see an immediate drop in the investment. Here’s the story of Thursday’s wild ride.
What Happened: Shares of Spirit Airlines tumbled this week on news that a federal judge blocked the planned acquisition of the company by JetBlue Airways Corporation JBLU. The drop didn’t scare away one trader.
Best known as the founder of Barstool Sports, which was recently re-acquired from PENN Entertainment PENN, Dave Portnoy has also come to be known for his stock and cryptocurrency trading in recent years.
On Thursday, Portnoy announced in a tweet and a blog post that he had bought “a ton of Spirit Airlines stock.”
Portnoy recalled being a “huge Spirit Airlines guy” back during his Davey Daytrader days of day trading stocks.
“Right when I went all in on Spirit at 7 bucks everybody’s favorite grandpa Warren Buffett announced he was selling all his stock in all the airlines,” Portnoy wrote.
Portnoy recalled Spirit stock later skyrocketing into the $20s and compared the battle with Buffett as one of a young Larry Holmes defeating a “well past their prime” Muhammad Ali.
The sports personality wrote that he was struggling to believe that if the only choices for Spirit were to merge with JetBlue or file bankruptcy, that a judge would block the deal from going through.
“Like it would seem to me that if Spirit goes out of business than the very Poors that government is trying to protect would no longer be able to fly on Spirit anyway since they’d be belly up. I just fundamentally don’t understand how in any capitalistic society a judge can block a merger between 2 companies when 1 of them is in dire straits.”
Portnoy said that the ruling from the court could be appealed or overturned or the government could bail the company out given the importance of the airlines’ existance.
“They can’t just let them go out of business either right? Or am I making too much sense? Either way I’m all in…”
The Aftermath: Nearly immediately after Portnoy posted his tweet that he had bought Spirit Airlines shares, the stock dropped.
“David Portnoy, the president of Barstool Sports, announced at 11:55 he had bough $SAVE. That exact minute, $SAVE announced restructuring per WSJ, making his investment fall 25% immediately,” Unusual Whales tweeted.
Portnoy stayed calm and said “the shorts and the suits” were trying to scare people with “false propaganda.” A tweet from Portnoy shared a Reuters story suggesting Spirit Airlines was looking to refinance its debt and was not considering restructuring.
Shares of Spirit Airlines rebounded throughout the trading day and closed at $5.70.
“What a ride today. $SAVE closes at $5.69. (Nice). Up over 40% from the day low and when #ddtg Global upgraded it to a mega buy. Back to war tomorrow.” Portnoy tweeted.
Unusual Whales shared that Spirit Airlines rallied from being down 33% to finish down 7% Thursday, with Portnoy up 5% on his “approximate position.”
SAVE Price Action: Shares of Spirit Airlines closed Thursday at $5.70 versus a 52-week trading range of $4.04 to $19.21. The new 52-week low was set Thursday, with a trading range of $4.04 to $5.94 on the day. Shares of the airline are down 62% in the last five days.
Photo by Zach Catanzareti Photo via Wikimedia.