Southwest Airlines Company (NYSE:LUV) shares are trading lower Thursday after the company reported worse-than-expected first-quarter financial results and issued second-quarter adjusted earnings per share guidance with its midpoint below estimates. Also, the company said updating its FY adjusted earnings per share guidance would not be productive due to ongoing macroeconomic uncertainty.
- Southwest stock is under selling pressure. What’s driving LUV stock lower?
Q1 Results
Southwest reported adjusted earnings per share of 45 cents, missing the consensus estimate of 47 cents. In addition, it reported revenue of $7.24 billion, missing the consensus estimate of $7.26 billion.
First-quarter passenger revenue totaled $6.6 billion, marking a 13.4% increase year-over-year and setting a company record for the period.
The company also reported record first-quarter passenger, operating and unit revenues overall.
Southwest said the first quarter represented a turning point, as its commercial, operational and cost initiatives began to translate into improved results.
Southwest noted that strong demand for its new product offerings contributed to the revenue growth.
"Our customers have embraced and value our new products, and that is reflected in our financial performance," said CEO Bob Jordan.
Stock Remains in Rebuild Mode
Southwest is sitting in the lower half of its $24.07 to $55.11 52-week range, which keeps the chart in "rebuild mode" after the February peak. The stock is trading 4.5% below its 20-day simple moving average (SMA) and 12.1% below its 100-day SMA, a setup that leans toward sellers controlling the short-to-intermediate trend.
The moving average convergence divergence (MACD), a trend/momentum measure, is above its signal line and the histogram is positive, which points to downside pressure easing versus the prior downswing. That "improving but not fixed" look fits with price still pinned under the $43.50 area where rallies have recently struggled.
Over the past 12 months, the stock is up 54.19%, which shows the longer-term tape has still rewarded buyers despite the recent pullback. The near-term question is whether the stock can hold above its longer-term trend line while it works through overhead resistance.
- Key Resistance: $43.50 — an area where rebounds have tended to stall.
- Key Support: $35.50 — a level where buyers have previously stepped in.
Southwest Shares Edge Lower
LUV Price Action: At the time of publication, Southwest shares are trading 2.13% lower at $38.52, according to data from Benzinga Pro.
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