Barstool Sports President David Portnoy yesterday announced a strategic investment in Spirit Airlines (NYSE: SAVE) at 11:55, only to witness a swift decline of 25% as the airline revealed its restructuring plans, according to the Wall Street Journal. As of now, Spirit Airlines is grappling with a 32% drop since Portnoy’s initial investment.
Portnoy, unfazed by the downturn, responded with characteristic bravado, stating he possesses “diamond hands.” Prior to the crash, he had detailed his investment rationale in a blog post, reminiscing about his earlier support for Spirit during his trader days.
The blog post reads, “So back in my DDTG days, I was a huge Spirit Airlines guy. This is really where the legend of Davey Daytrader was born.”
However, Portnoy’s optimism clashed with the recent setback for Spirit Airlines. The judge’s ruling against the proposed $3.8 billion merger with JetBlue Airways has sent Spirit’s stock on a downward spiral, plunging close to 54% in the past three days. The ruling highlighted concerns about increased competition and potential harm to consumers relying on Spirit’s low-cost model.
Portnoy expressed confusion about the decision, particularly given Spirit’s dire financial situation. He raised questions about how a judge could block a merger when one of the companies involved faced the possibility of bankruptcy, stating, “Something just doesn’t add up here.”
As Spirit Airlines shares continued to drop, Portnoy dismissed concerns, accusing “shorts and suits” of spreading false propaganda. He shared a link about Spirit Airlines seeking to refinance its debt, choosing not to acknowledge the restructuring talks.
Despite Portnoy’s defiance, Spirit Airlines faces mounting challenges. Citi’s downgrade to a “sell” rating, down more than half its value since the blocked merger, and concerns over the airline’s profitability and outstanding debt contribute to a gloomy outlook.
In a note, Citi analyst Stephen Trent expressed skepticism about the appeal process, questioning why JetBlue wouldn’t cut its losses. Meanwhile, some analysts speculate that Spirit might contemplate bankruptcy to streamline its balance sheet and reorganize.
Fitch, in a report on Wednesday, highlighted Spirit’s increased turnaround risk and significant refinancing risk, especially with its loyalty program debt due in September 2025. The airline’s current enterprise value to sales ratio also raises concerns compared to suitor JetBlue.
In the midst of the turmoil, Portnoy reflected on the day’s rollercoaster ride, stating, “What a ride today. $SAVE closes at $5.69. (Nice). Up over 40% from the day low and when #ddtg Global upgraded it to a mega buy. Back to war tomorrow.”
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
