American Airlines Group Inc. surged in early trading Thursday, extending a day-earlier gain as the carrier was swept up in a rally among heavily shorted stocks being targeted in Reddit\u2019s Wall Street Bets forum.<\/p>\n
The shares soared 45% to $24.07 ahead of regular trading, paring an increase that reached as high as 87%. The spectacular advance came even though American ventured a cautious outlook on when a recovery would materialize after an unprecedented drop in air travel last year because of the coronavirus pandemic.<\/p>\n
\u201cAs we look to the year ahead, 2021 will be a year of recovery,\u201d Chief Executive Officer Doug Parker said as the company reported earnings. \u201cWhile we don\u2019t know exactly when passenger demand will return, as vaccine distribution takes hold and travel restrictions are lifted, we will be ready.\u201d<\/p>\n
The surge underscored the disconnect between retail traders\u2019 attacks on shorted stocks and the reality of an industry where demand cratered because of the pandemic. Like its U.S. peers, American is still reeling from losses, and the company\u2019s narrower-than-expected deficit in the fourth quarter suggested nothing to justify a burst of market enthusiasm. American is the most shorted stock among major U.S. airlines.<\/p>\n
\u201cAAL the next GME?\u201d said Reddit user u\/cardiffgiantthe1st in an online discussion Wednesday, referring to the stock tickers of American and GameStop Corp., the video-game retailer that has been at the center of intense trading stoked by online discussions.<\/p>\n
American had a market value of $10 billion at the close on Wednesday, the least among the four biggest U.S. airlines.<\/p>\n
The share gains aren\u2019t \u201cfundamentally driven, as American\u2019s outlook is similar to others we have heard during this earnings cycle,\u201d Helane Becker, an analyst at Cowen & Co., said in a note to clients. \u201cThe near-term outlook remains challenging and timing of any improvement is still uncertain.\u201d<\/p>\n