Wheels Up Experience (UP)

Now we’ll change direction, and look into Wheels Up Experience, a company in the commercial aviation business. Specifically, Wheels Up operates an app that connects passengers with operators of private jets, making charter or private jet travel available to a wider audience than just the highly wealthy. Wheels Up member users can tap into a network of more than 1,500 private aircraft, all verified and safety-vetted.

In the first quarter of 2022, Wheels Up reported a strong year-over-year revenue gain of 24%, reaching a total top line of $325.6 million. This was driven by increase of 26% in the app’s active membership, which reached 12,424 in the quarter. The company’s live flight legs, a measure of travel undertaken, came in at 17,626, up 15% from the year-ago quarter.

Despite this growth in passenger use, the stock is down by approximately 44% year-to-date. A look at the earnings will underscore the investors worries.

Wheels Up reported a net loss of $89 million in 1Q22, up by $56.8 million year-over-year. On a per share basis, the net loss deepened from 17 cents in 1Q21 to 36 cents in this most recent report. While Wheels Up is gaining members and users, and expanding its reach in terms of total flights, the company is still having trouble turning a profit.

That did not stop insider David Adelman, one of the company’s directors, from spending $647,500 to buy up a set of 250,000 shares last week. This purchase follows a similarly-sized buy back in March of this year.

5-star analyst Aaron Kessler is also confident about this company’s future. In his coverage of UP for Raymond James, Kessler writes: “We are optimistic the company can return to high single digit contribution margins exiting 2023. Our positive fundamental view is based on: 1) a large and growing private aviation TAM; 2) Wheels Up is a leading on demand private aviation marketplace; 3) membership-based model drives predictable revenue base; and 4) our expectation for 15%+ long-term revenue growth and 10%+ long-term EBITDA margins.”

Kessler’s long term outlook is bright for this company, and he backs it with an Outperform (i.e. Buy) rating and a $5 price target that implies a one-year upside potential of ~91% for the stock.

So we have one 5-star analyst coming out for the bulls on this one – but what does the rest of the Street make of UP’s prospects? The stock has picked up 7 recent analyst reviews, and they include 4 to Buy, 2 to Hold, and 1 to Sell, adding up to a Moderate Buy consensus view. With a trading price of $2.62 and an average price target of $5.40, the stock has a potential upside of 106% for the next 12 months.