Stock of the Day: Delta drops 11% as forecast signals weak economic outlook

The move:

Delta Air Lines slid as much as 11% on Tuesday, hitting $44.5. The stock is down 16.81% for the year

Why:

The airline slashed its outlook for first-quarter revenue and earnings over concerns that travel demand will slow.

Delta expects year-over-year revenue growth of as high as 4%, compared to initial guidance of 7%- 9%. Earnings are projected to reach $0.30-$0.50 per share, or about half of the original outlook.

“The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in Domestic demand,” the
airline said said
after the closing bell on Monday.

What it means:

The company’s dimming outlook reflects weaker conditions for airlines and points to wider economic anxiety as consumer strength wanes.

The broader stock market cratered on Monday with recession fears in focus after President Donald Trump’s
refusal to reject
the possibility his policies could cause a recession.

Fading confidence in consumers’ travel spending dragged other airlines down on Tuesday. Shares in United Airlines and American Airlines dropped 2.42% and 2% in pre-market trading, respectively.

Southwest Airlines also slashed its first-quarter forecast and expects revenue to grow 2%-4%. However, the airline rose over 9%, boosted by its plan to end its free bag policy.

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