Singapore Airlines (SIA)
Asked on 30 Apr 2020
The most successful investor in the world Warren Buffet just dumped of all of his airline stocks. He is right. The world has changed after the coronavirus outbreak and sadly, the truth is airline (and tourism) industry won't recover at least 2 years later and it will be slow imo. Who knows if another virus will appear in the next years?
I would recommend not taking this risk.
Better stay with ETFs instead of single stocks, when even Mr. Buffet did not beat the SP500 index over 10 years currently. That is also what he recommends himself to retail investors!
Yes, I would say this is the best time to buy SIA. Warren buffet dump those US airline stocks because those companies were buying back stocks and their debt is massive. Probabilities are not in their favor if there is another leg down or a solvency event. Corona virus is the biggest stress that any airline could expierience. Think about this, what would be the worst thing that could happen to SIA. Will SIA go bankrupt? chances are very slim. Actually, its already going through its worst period and SIA has a much better balance sheet than those US airlines. If you are contrarian and a long term investor, This is one of the best time to allocate some money into SIA stock.
3 more comments
02 Jun 2020
Do not come and seek advice from online forums. Take everything with a grain of salt. That said, are you ready to face losses or slow gains for the next 2-3 years at least? The airline industry is currently under alot of stress because of a lack of demand for travel. Cycliical industries such as Consumer Discretionary and Hospitality are also under pressure. The covid situation is a demand shock problem and lack of human movement, you have to understand the underlying problem to why airline stocks are so cheap right now. Cheap may get cheaper and you may be catching falling knives instead, even so, SIA also just had its first round of rights issue for exisiting investors. This does not mean its the one and only rights issue. If in the next 12 months demand for travel is still not back, SIA may do another round or a few more rounds of rights issue to raise cash to save themselves. Are you ready to prepare for the initial investment + potentially more rights issue? Are you ready for the amount of risk? Just because it is a trending stock does not mean it is a good stock. Do your own research. In fact, fundamentally SIA has not been doing pretty well even during Pre-Covid times. Jet fuel prices are also fluctuating and the planes are sitting idle depreciating with time as it requires constant maintanence. If all these risk sound ok to you, and you can stomach a 100% loss then go ahead, no one knows what will happen in the near future.
Also, if you seek advice here on whether you should buy specific stocks, it means you are not ready to invest, instead you are speculating because no fundamental research has been done. I suggest you read up on investing before actually dipping in. I know investing is getting popular because of the recent crash but without prior knowledge of investing you are just going to get burnt. Please do your own due diligience.
People are mostly dumping their airline stocks now! I think due to the comment made by Buffet a few days ago. It is a bad time to enter the industry. Much as stock prices are determined by the intrinsic value of the company, it is also controlled by demand and supply aka investors' sentiments. What most investors will do is to follow Buffet, which leads to a self-fulfilling prophecy as the demand decreases and supply increases due to stock dumping, which leads to a further drop in share price.
Also, this coronavirus has proved to be much more serious than SARS already, with the extended lockdowns and internationally, flights and tourism have ceased. I doubt recovery will happen so soon sadly. We are also not sure of the long-term impacts on the industry yet.
Hence, I would not recommend with this two reasons.
I suggest u to avoid airlines stocks. top fund managers like Terry Smith do not invest in airline or Warren Buffett has recently sold off all his airline stakes.
Hope it answer your question
Hi. As of 11 May, I would say that if you had bought in 1st May, congrats. You would have abit of profit now.
For some reasons (I dont know why), the prices went up during ex rights and that was the best time to sell it off (highest was around 20% profit). But now the price came back down slightly.
My take is that the price will drop slightly further as the aviation sector will not be able to recover as fast. The reason for this rights call is because the industry is not doing well.
Thus I would say that if you are here asking this question means that you do not have enough knowledge in this sector and advise you NOT to enter the market blindly just because the price is low. Do more research and see if its worth going into SIA.
1 more comments
11 May 2020
30 april PM lee mentioned SIA in his May day Rally, on how it was badly affected by Covid19 and how many jobs were lost.
And how the government will help SIA back...
our Government won’t let SIA collapse, that is for sure.
whether it is a good buy for the future, do your own due dilligence.
personally i think there are tons of pent up demands in the next few months and low cost fuel. It will fly well but definitely going to take a long time to recover.
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