If You Had Purchased $10,000 Worth of Spirit Airlines Shares a Decade Ago, This Is Your Current Value

If You Had Purchased $10,000 Worth of Spirit Airlines Shares a Decade Ago, This Is Your Current Value

Have you been pondering over Spirit Airlines (SAVEQ) lately, seeing as its stock has taken a hit? The decrease in its value might have caught your attention, potentially making it a more enticing investment choice. You might even fantasize about the substantial earnings you could have made, and maybe even think about how much wealthier you'd be right now if you'd injected $10,000 into it a decade ago. Let's dig deeper into these thoughts.

First, let's analyze how the stock has been performing. Back in October, my colleague Neil Patel posed the question, "Does a 97% drop signify it's time to buy Spirit Airlines stock?" - that ought to give you a hint. Oops, indeed, the stock had recently plummeted 85% from its 52-week peak, and that was after a 100% plus surge in October. Its 10-year average annual return, or more accurately, loss, was recently recorded at -26%.

So, if you had put $10,000 into Spirit Airlines a decade ago, in 2014, what would your stake be worth now? I apologize to report that the figure stands at a meager $377, as of Nov. 8. That's quite a sting. But here's a more painful reality: It's generally wise to reinvest your dividends from a dividend-paying stock in additional shares of stock, as these shares can subsequently grow in value for you and generate more dividends to reinvest. However, in Spirit Airlines' case, after 10 years, you'd have ended up with less - you'd have only had $342, due to the shrinking share value.

This is what's currently happening with Spirit: It was burdened with debt and battling for survival, in part due to the pandemic, and agreed to be acquired by JetBlue. Unfortunately, that deal fell through, and Spirit now seems to be considering filing for bankruptcy protection.

This should provide enough reasons for you to avoid investing in the airline. Companies can emerge from bankruptcy and thrive, but their initial investors usually don't benefit. Spirit is now negotiating with Frontier Airlines, but why risk your money on a volatile stock when there are multitudes of appealing stocks in a much healthier financial state, with better prospects?

Considering the financial turmoil Spirit Airlines (SAVEQ) is currently going through, with potential bankruptcy on the horizon, it might be wise to reconsider your investment plans. Instead of putting your money into a volatile stock like Spirit, you could consider investing in more stable, dividend-paying companies that offer better potential returns.

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