Why is Wheels Up stock so volatile?

The company has laid off pilots, after racking up major losses in 2023

7/10/24 10:39AM

In the last month, the second most volatile US stock worth more than $2 billion has been the headline-hogging meme stock GameStop. The most volatile, per data from FinViz, is "on-demand" private aviation company Wheels Up, which has seen its share price move: +36%, +7%, +23%, -24%, and +11% in the last 5 days alone, with the stock having doubled since June 21st.

Part of the reason for that volatility is that only a small portion of its shares are available for public trading (what’s known as a low float). Another is that the company’s business model remains unproven at scale.

The 30,000 foot view

The first rule of business is that you usually shouldn’t sell a product for less than it costs to produce.

Restaurants, for example, make healthy profits — or specifically gross profits — on their sales. Salad chain Sweetgreen only spends about $4.15 out of a $15 salad on the ingredients and packaging of the food. Nike makes a ~45% gross margin, leaving itself a healthy buffer to cover marketing, admin expenses, and other overheads.

Now, the premise gets a little bit more complicated when you’re trying to be “Uber for the sky”, as you juggle planes, pilots, software, and fuel, but the fundamental rule remains: try not to lose money on each flight. Wheels Up, which opens up access to private jets not just to the super-wealthy but to the moderately super-wealthy, doesn’t make the math work.

Last year, the company reported $1,253 million in revenue. However, just delivering on its service cost it almost its entire takings, with aircraft leases, fuel, maintenance, fees, cabin crew labor, plane parking, and more setting it back $1,233 million. Once other overheads were accounted for, that left the company deeply in the red.

Turbulent times

Wheels Up landed on the public markets in 2021 as part of a wave of SPACs during the pandemic. It’s time as a public company has not been smooth — despite the recent uptick, the stock is down more than 96% from its peak. Last year, Delta and a group of investors stepped in with a $500 million lifeline for the company, but UP’s woes have continued. Revenue dropped 44% year-on-year in Q1, and the company reportedly laid off around 11% of its pilots as it moves to reduce its fleet size.

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Electronic Arts launches a platform to put more ads in its games

Video game publishing giant EA launched a new platform on Monday designed to make the process of selling immersive ad space in its popular games easier.

The company says the platform, called EA Advertising, allows brands to “integrate directly into gameplay through dynamic, real-time placements, from stadium signage to custom in-game content.”

More so than other studios, EA has incorporated advertising into its most popular titles. As Kotaku points out, the company’s ad efforts stretch as far back as 2006. Several of its sports franchises already feature partnerships with brands like Visa, Lowe’s, Red Bull, and PepsiCo.

In-game advertising hasn’t exactly been embraced by fans, but industry experts expect it to ramp up as companies seek more revenue to offset higher games budgets and surging memory costs. EA rival Take-Two has taken a different approach, with CEO Strauss Zelnick recently saying the company was “not at risk of doing brand partnerships” in the forthcoming “Grand Theft Auto VI,” and that ads in full-price games seems “unfair.”

The $55 billion deal to take EA private, led by Saudi Arabia’s Public Investment Fund, is set to close at the end of this month. Being the largest leveraged buyout in history, EA will likely look for more ways to boost revenue to cover interest payments.

Electronic Arts Makes Push for Ad Dollars Tied to Sports

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JM Smucker says it sold $1 billion worth of Uncrustables in FY2026

After years of booming sandwich sales, JM Smucker has finally earned a billion-dollar crust.

On Tuesday, the company reported results for fiscal year 2026, highlighting better-than-expected profits driven by higher prices for coffee and sweet baked goods. However, at another point on the earnings call, CEO Mark Smucker pointed to one particularly jammy figure: in line with previous forecasts, the company sold $1 billion worth of its (almost always) crustless sandwiches, Uncrustables, in the last year alone.

Max Knoblauch6/8/26

Paramount reportedly offers concessions to resolve multistate antitrust investigation

Paramount has reportedly offered up some concessions in an effort to prevent an antitrust lawsuit by California and about 10 other states, according to Bloomberg reporting on Monday.

Reuters first reported on the potential suit from a group of unnamed states last week, which could throw a wrench in Paramount’s plans to buy rival Warner Bros. Discovery in a Hollywood megamerger.

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

Paramount Offers Concessions to Head Off State Antitrust Lawsuit

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

$98B ⛽

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The IATA released its latest financial outlook for the airline industry over the weekend, forecasting a $98 billion jump in the sector’s collective fuel bill. The world’s largest trade group representing airlines expects the oil spike to halve profits by 49% from last year to $23 billion.

The group also expects profit margins to halve year over year, falling from 2025’s 4.2% to 2%. Still, revenue is expected to climb to $1.17 trillion from $1.07 trillion.

A surge in the cost of jet fuel has rocked US and global airlines this year, leading Delta Air Lines, United Airlines, American Airlines, Southwest Airlines, JetBlue, and others to raise fares and ancillary charges like bag fees. Low-cost carriers, which operate on smaller margins, have been squeezed the hardest, resulting in Spirit’s shutdown.

“It’s a tough year for all airlines, especially those whose balance sheets had not yet recovered from COVID. And, of course, for those operating in the Gulf,” said IATA Director General Willie Walsh, who added that demand is holding up and about half of passengers expect to spend more on travel this year. “That bodes well for a strong northern summer peak season. The big unknown is how long travelers and shippers can tolerate the higher costs of connectivity.”