How to Buy EasyJet Stock in 2021
The coronavirus pandemic dealt a big blow to the aviation industry in 2020, but the availability of the vaccine in the latter part of the year has reignited investors’ interest in the industry. The share prices of airline stocks have been on the rise since the beginning of 2021, and one of the companies positioned to benefit from this renewed aviation interest is EasyJet. This article is a guide for prospective investors who may wish to buy EasyJet.
Learn How to Buy EasyJet Stocks in 3 Easy Steps
Find a Broker
Finding the right stockbroker and opening a share-dealing account is the first step to buying the shares of any publicly traded company. Be sure the broker has access to the London Stock Exchange, which is where EasyJet stock is primarily listed.
Analyze the EasyJet Stock Price Chart
Although you have already chosen to buy EasyJet stock, you still need to perform technical analysis to know when to buy the stock. You may wish to buy when the easyJet share price has a dip or a breakout. Technical analysis can help you determine the right support level to buy a dip or the resistance level to trade a breakout.
Place your buy orders when your research tools and analysis indicates the right time to buy the stock. Trade either at the market price or use a limit order to buy when the price is no more than your acceptable level. Always ensure that you have a proper risk management strategy in place.
EasyJet Company Overview
Low-cost air carrier EasyJet was established in 1995 as part of the EasyGroup conglomerate, which is headquartered in Luton, United Kingdom. The company, through its two subsidiary airlines (EasyJet Switzerland and EasyJet Europe), operates an extensive network of low-cost services in about 156 airports across 33 countries. As of September 30, 2020, the company operated 981 routes and a fleet of 342 aircraft.
EasyJet Business Model and Revenue Streams
EasyJet’s business model is to provide low-cost services to air travelers. Its cost differentiation strategy has given it a source of sustainable competitive advantage over other airlines. The company has two main streams of revenue: fares and ancillary services. However, close to 80% of the company’s revenue is generated through airfares.
Ancillary services, which contribute about 21.5% of the company’s revenue, refer to those services the airline provides to passengers beyond air travel, such as non-flight scheduled services, internet-related services, and the in-flight sale of beverages, food, and merchandise. The revenue from this segment has also been growing rapidly as the company devises more ways to make money from customers apart from airfares. For example, in the 2019 fiscal year, the revenue increased 26% to $719m.
History of EasyJet
EasyJet plc was established in 1995 by Greek-Cypriot Stelios Haji-Ioannou, who took an interest in the aviation business after being approached as a potential investor in Virgin Atlantic's Greek franchise. The company primarily operates commercial airlines in Europe but also leases aircraft, organizes tours, and provides financing services. EasyJet has a total of 342 aircraft in its fleet, flying 981 routes. The airline is famed for its no-frills approach, which eliminates unnecessary services, allowing it to offer its flights at low costs to travelers.
The company always tries to reduce operating costs by all means. It initially did not own any aircraft but operated a pair of wet-leased Boeing 737-200 aircraft, which made industry watchers refer to the company as a “paper airline”. The company also initiated a paperless concept which reduced the quantity of stationery the company used. To encourage the newly formed airline company, the management of Luton Airport allowed EasyJet to use the 15,000 square feet building for free.
Despite its cash-strapped beginnings, EasyJet has seen steady expansion since its establishment through a series of acquisitions and a cost-cutting strategy that has helped it grab market share from big players in a highly competitive industry. In 2014, the airline became the second-largest budget airline in Europe by the number of passengers carried, just behind Ryanair — another airline with a no-frills approach. This attracted attention from the big players worried that EasyJet was taking a chunk of their market share. In response, one of its direct competitors, KLM, engaged in a predatory pricing strategy that led to a European Union investigation over unfair competitive practices.
EasyJet plc was listed on the London Stock Exchange in November 2004 and subsequently quoted on the US OTC market in October 2009.
Brokers that Offer EasyJet Shares
You can buy EasyJet shares from any stockbroker that has direct or indirect (via a partner stockbroker) access to the London Stock Exchange where shares of EasyJet are listed. We have compiled a list of the best brokers that offer EasyJet shares after considering their trading commissions, the user features of their trading platforms, and other services.
Should I Invest in EasyJet Stock?
The availability of the coronavirus vaccine has opened up the hospitality and aviation sectors once again, and EasyJet is one of the stocks that is positioned to benefit from that. You could benefit from rising demand for airline stocks by investing in EasyJet stock.
EasyJet Stock Investment Potential
At the time of writing, the investment potential of EasyJet is for short-term plays, just to benefit from the post-pandemic rotation into value stocks. Over the long term, the stock will be burdened by the company’s debt profile, which is up to the tune of about $2bn. Also, there is no assurance that the airline will be operating at full capacity even by the end of 2021. Moreover, rising oil prices may keep operating expenses high and reduce profit margins.
What Kinds of Investors Should Include EasyJet Stock in their Portfolios?
As of the time of writing, EasyJet stock is suitable for short-term investors because the stock is just benefiting from the market’s post-pandemic rotation into value stocks. The company, just like many other airlines, has a huge debt profile, which reduces its long-term appeal. However, EasyJet is known for cost-cutting as a way to improve profits, so it may still be an option for investors with a long-term outlook.
How Much Should I Invest in EasyJet?
How much you invest in EasyJet depends on what you have budgeted for investment. The golden rule of investment is to never invest more than you can afford to lose and do not allocate more than 2% of your investment capital to any single stock in one trade.
How to Buy Shares in EasyJet Stock?
Generally, you can buy shares of any publicly traded company via a stockbroker or directly from the company through what is known as a direct stock purchase plan (DSPP). Unfortunately, shares of EasyJet are not offered directly through direct stock purchase as EasyJet does not have such a plan in place as at the time of writing. So, you can only buy the shares through a stockbroker.
Buy EasyJet Shares through a Broker
EasyJet shares are traded on the LSE, so you need a broker with access to the exchange to be able to trade it. Sign up with a good broker and search for EasyJet stock using the appropriate ticker (LSE: EZJ). Fill in the number of shares you want to buy and place your trade. When your trade has been executed, you will see it displayed on your screen dashboard.
Frequently Asked Questions
The availability of the coronavirus vaccine has opened up the aviation industry once again. In addition, the rotation play in the market in 2021 makes EasyJet a good stock for short-term trading at the time of writing.
EasyJet was profitable in the years leading to the pandemic. However, the company posted a loss in the 2020 financial year.
EasyJet had been paying dividends, but the company didn’t pay dividends for the 2020 financial year because it made a huge loss due to the coronavirus pandemic.
EasyJet stock is primarily listed on the London Stock Exchange. However, the stock is also traded on the Stuttgart Stock Exchange and Xetra marketplace in Germany.
It is necessary because fundamental analysis only tells you whether the company is in good financial health. You need technical analysis to know the right time to buy the stock. Depending on your trading style, you can buy on a pullback to a support level or the breakout of a resistance level.
The first rule is to invest with only an amount you can afford to lose and not commit more than 2% of your investment capital in one trade. The second is to always place a stop-loss order to limit your losses to the amount you intended to risk.