EasyJet Shares Have Had A Difficult Year, But Does This Present A Buying Opportunity?

EasyJet shares have had a difficult time in 2022, but has its recent decline presented a buying opportunity?

The airline has fallen 26% this year, and the company reported a third-quarter loss before tax of £114 million following the recent airport disruptions

Not ideal.

However, revenue in the first half of the year jumped 524.2% to £1.5 billion from £240 million in the previous year (of course, 2021 was impacted by restrictions).

In addition, EasyJet stated its operations had since normalised from the frantic cuts to its schedule and the 22 million passengers flown in fiscal Q3 was 87% of FY19 capacity. At the same time, load factor grew significantly in June, reaching 92%. 

The carrier revealed in its latest earnings release that fourth quarter bookings are currently at 71%, and it expects capacity in Q4 to be 90% of 2019 levels with load factors above 90%.

Despite the many travel-related issues, current data suggests EasyJet is on the road to recovery, and we are leaning bullish on the stock. Here’s why:

Twitter Mentions Level-Off

According to our tracking of EasyJet Twitter mentions, consumers talking about EasyJet have declined over the last four weeks. Now, a decline is not usually considered a positive; however, its most recent spike in June was due to the travel chaos — the fall in mentions shows signs of airline issues potentially easing.

In addition, while there has clearly been a decline, EasyJet mentions are still above April/May levels.

Qualitative research reveals tweets regarding travel disruptions (cancelations/delays) are declining.

Website Traffic Continues to Fly

Source: Semrush

Furthermore, Semrush tracking of organic traffic to EasyJet’s website over the last two years shows demand for flights has, as expected, increased significantly in 2022 and shows no signs of declining just yet. 

Organic traffic has more than doubled since reaching its lowest levels in September and October of 2021. 

Trending Upwards

Meanwhile, according to Google Trends, searches for EasyJet in its three biggest markets over a 5-year period have increased considerably.

In the UK, Google searches have recovered and surpassed pre-pandemic levels, although it’s important to note that since early June, interest has dipped back below.

In addition, France and Italy’s search interest is trending positively, approaching pre-pandemic levels.

Bottom Line:

It’s clear to see that airlines are still experiencing problems despite travel restrictions being all but gone. Inflation remains a huge problem on a global scale, and the broader economy is in a difficult situation, potentially weighing on consumer wallets.

However, airline demand remains strong, and EasyJet’s forecasted capacity is not far from its 2019 levels.

With demand metrics pointing higher and EasyJet shares still at significant lows, we are leaning bullish.

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