Why has the easyJet share price jumped by half since January?

Our writer missed gains of 50% by not investing in easyJet at the start of this year. But could its share price carry on soaring?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Jumbo jet preparing to take off on a runway at sunset

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Up, up and away. Not only does that describe the holiday dream of many passengers on easyJet (LSE: EZJ), it also sums up the recent moves in the budget carrier’s share price.

The stock has jumped 50% since the turn of the year. Over the longer term, things have been less rewarding, with the company trading 11% below its price a year ago.

Still, there seems to be real momentum at the moment. What explains that – and is there runway for further price increases that could justify buying easyJet for my portfolio?

Should you invest £1,000 in Angling Direct Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Angling Direct Plc made the list?

See the 6 stocks

Soaring demand

A trading update earlier this month gives an indication of why the easyJet share price has been soaring.

Passenger numbers in the final quarter of last year and first three months of 2023 grew 35% compared to the same periods a year earlier. Not only that, revenue per seat jumped 43%. That shows the benefit to the airline’s top line of higher pricing and filling a larger percentage of seats on its flights.

This fed through into the company’s finances, with net debt falling two thirds to £0.2bn. A strong balance sheet was historically one of the attractions of investing in easyJet when compared to some peers in the aviation sector, so I am pleased to see its debt being reduced substantially.

For the next six months, easyJet plans to offer around 9% more seats than in the prior year period.

Still not profitable

But while those performance figures look good and there is the prospect of higher demand ahead, the company is still not out of the clouds.

In the six month period, easyJet reported a headline loss before tax of £415m. While that is a substantial improvement from the same period a year ago, it is still a large loss.

Will things get better, helping to justify the rise in the easyJet share price? The airline thinks so, saying it expects to exceed current market expectations of a £260m profit for its full financial year. That suggests a sharply improved performance in the second half.

Time for take-off?

Still, is that outlook enough to justify the current easyJet share price?

Created with Highcharts 11.4.3easyJet Plc PriceZoom1M3M6MYTD1Y5Y10YALL19 Apr 20188 May 2025Zoom ▾2019202020212022202320242025202020202022202220242024www.fool.co.uk

Even after the share price rise, easyJet still has a market capitalisation of only £3.8bn. The shares are 67% cheaper than five years ago. That might look like a bargain.

However, the airline is very different to five years ago.

Yes, it still benefits from a proven business model, strong brand and good liquidity. But it is also indebted and currently lossmaking, even though it expects to break into the black soon.

It faces risks such as ongoing high oil prices and the potential for further aviation demand disruption in future. A key lesson from the pandemic is how vulnerable a successful airline can be to such an unforeseen event.

I think the share price already factors in the positive outlook. Now it is time for easyJet to deliver, to justify the sharp increase in valuation this year. For now at least, I have no plans to invest.

Should you buy Angling Direct Plc now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

C Ruane has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Here’s a Warren Buffett share I’m considering adding to my portfolio!

Of the dozens of businesses Berkshire Hathaway has interests in, this is the Warren Buffett beauty I'm looking to buy…

Read more »

Happy woman commuting on a train and checking her mobile phone while using headphones
Investing Articles

7% and 13.4% dividend yields! 2 investment trusts to consider for a second income

Considering some dividend-paying investment trusts could be a great way to make a start on sourcing a second income in…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

275 shares to consider for a 9.64% Stocks & Shares ISA return!

Looking for ways to boost a Stocks and Shares ISA? Here's a top investment trust that's delivered huge returns since…

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

£10,000 invested in NatWest shares 5 years ago is now worth…

NatWest shares have surged over the past five years, rewarding investors as if it were some sort of revolutionary artificial…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Does the GSK or AstraZeneca share price currently offer the best value?

The AstraZeneca share price has pulled back in recent months. Dr James Fox explores how the stock compares with pharma…

Read more »

Abstract 3d arrows with rocket
Investing Articles

Looking for FTSE 100 stocks? Here’s one I think could lift off in 2025!

Diageo's share price has dropped 15.3% in the year to date. Could it be about to become one of the…

Read more »

Front view of a young couple walking down terraced Street in Whitley Bay in the north-east of England they are heading into the town centre and deciding which shops to go to they are also holding hands and carrying bags over their shoulders.
Investing Articles

Up 15% in a month and still yielding 9.5% – this FTSE second income stock is on fire!

Harvey Jones says wealth manager M&G offers one of the most exciting second income streams on the entire FTSE 100.…

Read more »

Wall Street sign in New York City
Investing Articles

Looking for cheap stocks to buy? 2 reasons now might be the ideal moment!

Amid market turbulence, our writer has not been diving for cover, but actively on the hunt for stocks to buy…

Read more »