EasyJet (EZJ) shares opened up to 20% lower this Monday morning compared with Friday’s close, on plans to raise £1.2 billion in stock and debt after rejecting rival Wizz Air’s bid for the airline business.
The story so far:
EasyJet shares fell more than 10% last Thursday when the British budget airline rejected a bid from Hungarian rival carrier Wizz Air.
EasyJet shares gapped down to open up to 20% lower on Monday morning compared with Friday’s closing price.
Let me remind you what EasyJet is, then we’ll look at whether this share price plunge presents a purchase opportunity.
What Is EasyJet?
EasyJet is a Luton-based low-cost British airline group that was founded in 1995. Almost one year ago the company was operating almost 1000 routes with a fleet of nearly 350 aircraft, but it was heavily affected by the coronavirus pandemic.
Should You Buy EasyJet Shares Right Now?
Looking at this simplistically, you might be tempted to buy EasyJet shares “on the dip”, except that the price hasn’t really “dipped” because it wasn’t going up.
Also looking at this simplistically, you might simply say that EasyJet shares are much cheaper today than they were last week — what a bargain! — except that the shares were bound to be worth less because of the impending rights issue that will dilute existing shareholders. So, has the price fall “priced in” the result of the rights issue, or has the share price overshot in a downward direction?
Finally, could EasyJet now become a target for a takeover bid battle of the kind that sent Morrisons Supermarkets (MRW) and Meggitt (MGGT) shares soaring recently?
These are the questions you should ask yourself before buying.
EasyJet Price Targets
Not so long ago, 15 analysts (out of 24) were recommending buying EZJ shares, seven were suggesting you should hold, and two were saying “sell”. The average price target was about 830p-per-share, which — at more than 40% higher than today’s price — now looks silly, to say the least. However, stranger things have happened.
Where Can You Buy or Sell (Short) EasyJet Shares Today?
If you think that the EasyJet share price can take off again after today’s crash landing, you can buy the stock via a broker. If you think the shares have gone into a downward death spiral, you can short the stock by placing a spread bet or selling a contract-for-difference (CFD) via a broker. Here are two of the best brokers we know, where you can open an account within minutes:
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