2023-06-14 01:06:12 ET
Summary
- Delta Air Lines demonstrates strong financial performance and resilience in the aftermath of the COVID-19 pandemic, with a bullish outlook for revenue growth and stock prices.
- The company's investments in the eVTOL sector provide opportunities for future growth and profitability in the evolving transportation landscape.
- The stock price of Delta Air Lines is breaking out of the falling wedge pattern, signaling a positive outlook ahead.
In the wake of the COVID-19 pandemic, Delta Air Lines, Inc. ( DAL ) demonstrates an inspiring narrative of resilience and strategic planning, expertly navigating the post-pandemic landscape to maintain strong financial performance. This article endeavors to shed light on Delta Air Lines' recent developments, future market projections, and the potential risks on the horizon. The article delves into a detailed examination of Delta Air Lines' stock price through price action analysis to predict future trends. The results suggest a robust positive momentum, with the stock price gradually emerging from the confines of falling wedge patterns. This breakout from the falling wedge signals a potential bullish trend, indicating the likelihood of a rise in stock prices.
Recent Development for Delta Air Lines
Delta Air Lines has been displaying a resilient financial performance in the aftermath of the COVID-19 pandemic. In the first quarter of 2023, the company generated a robust revenue of $12.76 billion, showcasing a slight decrease from the $13.44 billion in the last quarter of 2022. Despite this marginal fluctuation, Delta Air Lines has consistently been generating high revenues post-pandemic, underscoring its robust financial health and recovery potential as shown in the chart below. Comparatively, Delta Air Lines' quarterly revenue for Q1 2023 still surpasses the figures from 2019, denoting a positive trend over a five-year period. The YoY growth in revenues is stabilizing at 36.49%, and based on recent market trends, is predicted to climb higher.
The Federal Aviation Administration's forecast of strong positive trends for air travel in 2023 as the cancellation rates for 2023 was much lower than the last year, offers further positive implications for Delta Air Lines. With Delta Airline's own projections expecting to fly about 2.8 million passengers during this period - a rise of 17% from the previous year - the outlook for revenue growth is promising. This surge aligns with the wider pent-up demand for travel and the expected busy summer season, potentially leading to a significant increase in Delta Air Lines' passenger volumes and consequently, its revenues. Despite Delta Air Lines' stock still being 40% below its value at the start of 2020, the positive industry forecast indicates substantial potential for value appreciation.
Furthermore, the rapidly evolving electric vertical take-off and landing (eVTOL) industry offers additional growth opportunities for Delta Air Lines. As an active investor in this pioneering sector, Delta Air Lines is well-positioned to benefit from the expanding market for air taxis and short-haul services. Delta Air Lines' multimillion-dollar investment in Joby Aviation ( JOBY ), a prospective industry leader expected to gain regulatory approval by 2025, highlights Delta Air Lines' strategic foresight. With eVTOLs poised to disrupt the ride-sharing industry and potentially serve up to 45 million monthly active riders within the next decade, this emerging market could provide new profitable avenues for Delta Air Lines, reinforcing its position in the future of mobility. As the eVTOL sector continues to mature, Delta Air Lines' early investment can potentially yield significant returns, solidifying its growth trajectory in this high-growth market.
Bullish Outlook for Delta Air Lines
As the underlying projection for Delta Air Lines is inclined towards growth, the technical perspective is equally buoyant. The stock price of Delta Air Lines, as seen on its monthly chart, is currently presenting a highly volatile pattern. A historical analysis of the price formations suggests a bullish trajectory. This positive trend is underscored by the emergence of a double bottom pattern marked at $3.55 and $3.12 in 2008 and 2009 respectively, leading to a significant rally thereafter. Between 2008 and 2012, the consistent formation of successive candle wicks solidified this bullish pattern, fuelling an impressive rally that catapulted the stock from its 2012 lows of $7.48 to its 2015 highs of $45.96. However, the COVID-19 recession exerted immense pressure on Delta Air Lines, evidenced by a sharp decline in its stock price. This downturn is reflected in the prominent candle wick formation on the monthly charts.
As of June 2023, the stock price is grappling with the 2019 trend line drawn from the high of $62.54. A successful breach of this trend line could potentially ignite a robust rally, thrusting the stock further upward.
A closer look at the weekly charts for a more granular view shows that the COVID-19 recession caused the stock price of Delta Air Lines to plummet, bottoming out at $17.51. However, the stock demonstrated resilience by staging a powerful rebound from this low as shown in the chart below.
Following the recovery, Delta Air Lines' stock price has created a falling wedge pattern within the $52.28 and $27.20 range, and the market is currently attempting to breach this pattern. The breakout point at $41 predicts a near-term target of $52.28. The formation of a falling wedge signifies price volatility and oscillation, and any disruption of this pattern signals the onset of the next market surge. Consequently, these developing patterns suggest a potential uptrend for Delta Air Lines, contingent upon a triumphant escape from the current intricate trends.
Market Risks
While Delta Air Lines has shown considerable financial resilience in the aftermath of COVID-19, it is not impervious to potential challenges. Notably, an unforeseen surge in fuel prices could drive up operational costs, thereby threatening to erode profit margins and undermine Delta Air Lines' overall financial health. Although the airline industry is showing signs of recovery, Delta Air Lines' operations are still vulnerable to unpredictable developments related to the pandemic, such as new COVID-19 variants, changes in travel restrictions, and consumer behavior. Any resurgence of the virus could severely affect demand for air travel. Moreover, Delta Air Lines' investment in the eVTOL industry exposes it to potential regulatory risks. Regulatory approval for eVTOLs is still in process and any delays or unfavorable decisions could impact investment in this sector.
The volatile pattern of Delta Air Lines' stock price presents investment risk. Although current analysis predicts a bullish trajectory, unforeseen market changes could impact this trend and lead to potential losses. The eVTOL sector is likely to witness intense competition as more players enter the market. Despite its early investment, Delta Air Lines might face challenges from competitors, which could affect the profitability of its investment. From a technical standpoint, the stock price has yet to surpass the $41 mark, indicating that the price remains within the confines of the falling wedge pattern.
Bottom Line
In conclusion, Delta Air Lines shows strong price behavior after the COVID-19 pandemic. With consistently strong financial performance and a positive outlook for revenue growth, Delta Air Lines is well-positioned to capitalize on the recovering travel industry. Furthermore, its investments in the eVTOL sector provide opportunities for future growth and profitability in the evolving landscape of transportation. While there are potential risks, such as fuel price fluctuations, pandemic-related uncertainties, and regulatory challenges in the eVTOL industry, Delta Air Lines has shown its ability to adapt and overcome obstacles. Overall, the current analysis suggests a bullish trajectory for Delta Air Lines, indicating a potential rise in stock prices and solidifying its position as a leading player in the airline industry. The breakout line for the falling wedge pattern in Delta Air Lines' stock price is situated between $40 and $41. If the stock price manages to close above this level on a monthly basis, it will signal a break within the bullish pattern and indicate a positive trajectory for Delta Air Lines.
For further details see:
Delta Air Lines: Buy The Market (Technical Analysis)