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<ul class="summary-list"><li>Warren Buffett's Berkshire Hathaway bought Domino's Pizza and Pool Corp. stock last quarter.</li><li>Buffett loves fast food and already owns distribution businesses, making the pair a natural fit.</li></ul><a target="_blank" class="" href="https://www.businessinsider.com/how-warren-buffett-spends-money-net-worth">Warren Buffett</a>'s Berkshire Hathaway added Domino's Pizza and Pool Corp. to its stock portfolio last quarter, a regulatory filing <a target="_blank" class="" href="https://www.businessinsider.com/warren-buffett-berkshire-hathaway-dominos-pizza-pool-corp-stock-portfolio-2024-11">revealed</a> on Thursday. The pizza chain and swimming pool specialist seem like good fits.The famed investor's conglomerate bought nearly 1.3 million shares of Domino's, a 3.7% stake worth $549 million at the end of September. Berkshire also purchased a 1.1% position of Pool Corp, worth $152 million at the quarter's close.Domino's shares jumped 8%, and Pool Corp. shares jumped 6% after the news came out on Thursday as the "<a target="_blank" href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-ulta-beauty-heico-apple-stock-portfolio-2024-8">Buffett Effect</a>" spurred other investors to buy them.It's worth noting that one or both of Buffett's investment managers, Ted Weschler and Todd Combs, were <a target="_blank" class="" href="https://www.businessinsider.com/todd-combs-and-ted-weschler-2014-3">likely behind</a> the stock picks given their small size relative to Berkshire's $266 billion US equity portfolio.<h2 id="3fc5b5d1-04ef-46f4-b033-2fe0114d1501">Slice of the pie</h2>As value investors, Buffett and his team specialize in <a target="_blank" class="" href="https://www.businessinsider.com/warren-buffett-cash-pile-berkshire-hathaway-stock-portfolio-crash-recession-2024-11">bargain hunting</a>. Domino's stock has skyrocketed more than 40-fold since the start of 2010, and traded north of $530 in late June — not far off its all-time high of around $560. Yet its price tumbled to around $400 by mid-July and remained depressed for the rest of last quarter, offering a buying window for Berkshire.Buffett <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-dream-business-is-sees-candies-2019-7">prizes brands</a> because they foster loyalty, enabling businesses to raise prices without losing customers to rivals.The 94-year-old Berkshire chief is a <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/warren-buffett-diet-mcdonalds-coke-junk-food-soda-ice-cream-2023-4">junk-food fanatic</a> whose company already owns businesses like Dairy Queen and counts Coca-Cola and Kraft Heinz among its largest stock bets. Domino's fits well among those kinds of names.One of Domino's key strengths is that it controls costs and boosts profit margins by licensing its brand to franchisees and then collecting fees and royalties.The company also charges them for food, equipment, and supplies, and takes a cut of their sales to fund advertising campaigns. Company-owned stores generated just 8.4% of the $4.5 billion in revenue last year.<h2 id="0583ac2c-58af-453e-a24c-d39b4038089e">Taking the plunge</h2>Pool Corp. shares dropped under $300 in early July, well below the $570-plus peak they touched in November 2021, which may have prompted Berkshire to buy in.The wholesale distributor of swimming pool equipment, parts, supplies, and related products generated $5.5 billion in net sales and $523 million in net income last year, sharp declines from the previous year.Berkshire owns numerous construction-related businesses, including Clayton Homes and Acme Brick. Buffett and his team are also deeply familiar with the industry, given Berkshire's ownership of McLane, a wholesale distributor.The result is that Pool Corp. sits firmly within <a target="_blank" href="https://www.businessinsider.com/warren-buffett-berkshire-hathaway-lifestyle-discipline-compounding-investing-william-green-2021-9">Buffett's "circle of competence,</a>" which he keeps in mind to ensure that he only invests in things he understands.Neither Domino's nor Pool Corp. classify as cheap on a price-to-earnings basis. But with the wider stock market hovering at all-time highs, they might be the next best thing to a bargain.Both seem to fit the Berkshire mold of unassuming businesses.Delivering pizzas and pool supplies isn't glamorous or innovative, but staid companies are often underappreciated by the market. They tend to trade more cheaply than flashier, tech-driven companies and are typically less volatile and vulnerable to market routs.The positions are so small that Buffett is unlikely to address them in any public appearances. That leaves it to investors to discern whether Berkshire has bought some gems or scooped up a couple of duds.

Warren Buffett's company just bought into Domino's Pizza and Pool Corp. Here's why both bets make sense.

<ul class="summary-list"><li>As fears over economic volatility and deficits grow, investors and central banks are buying gold.</li><li>Gold is often seen as a safe-haven asset among investors.</li></ul>Now is looking like a golden opportunity to <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/how-to-invest-in-gold">invest in gold</a>.For decades, the yellow metal has been considered a safe-haven asset, serving as a hedge against high inflation and economic uncertainty due to its low correlation to stocks and bonds.And there's certainly no shortage of economic uncertainty right now. The US presidential election is right around the corner, inflation concerns remain elevated, geopolitical tensions are high, and the US national debt is reaching untenable levels.Investors and central banks alike have been snatching up gold. The asset's price hit another record high earlier this week at $2,739.40 per ounce after rising over 30% this year, and some analysts are setting a price target of $3,000.Investing in gold is slightly different from putting money into stocks or bonds. Below, two gold experts share four ways investors can add gold to their portfolios.<h2 id="f6498d65-9f43-415b-a374-53643e6db3e3">4 ways to invest in gold</h2>For starters, investors can purchase the metal directly.You can buy gold coins online. You can buy gold bars at Costco. Those strip mall stores with a big "We Buy Gold" sign? You can buy gold there, too.Buying the physical commodity is a tangible way to invest in gold, but it does have some drawbacks. Jeff Muhlenkamp, portfolio manager at Muhlenkamp &amp; Company, points out that there are transaction costs when buying directly from a gold dealer. The investor also has to ensure the gold is certified regarding purity and weight. Buyers must also consider secure storage solutions and insurance for their physical assets.In general, physical gold is a less liquid way to own the asset and is quite costly. "Most of the time when people go and buy gold coins, they'll pay a big premium upfront, and they'll probably suffer a discount when they come to sell at the end," George Milling-Stanley, chief gold strategist at State Street Global Advisors, said.Investors can avoid the complications of investing in bars and coins by buying a gold ETF instead.Physical gold ETFs can be bought through a brokerage account and are directly backed by gold bullion held in bank vaults, meaning that investors don't have to worry about storage or liquidity issues. Examples include the iShares Gold Trust fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/ishares-gold-trust-us4642852044?miRedirects=1">IAU</a>) and the SPDR Gold Shares fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/spdr-gold-shares-us78463v1070?miRedirects=1">GLD</a>).Synthetic gold ETFs don't hold physical gold, investing instead in gold derivatives such as futures and options. These ETFs can be cheaper than physically backed ones since they don't need to store the metal, but they have counterparty risk, or the risk of loss from a contract participant not fulfilling their obligation. Examples include the SPDR Gold MiniShares Trust (<a target="_blank" href="https://markets.businessinsider.com/etfs/spdr-gold-minishares-us98149e3036?miRedirects=1">GLDM</a>) and the ProShares Ultra Gold fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/proshares-ultra-gold-us74347w6012?miRedirects=2">UGL</a>).For investors who want to get as close to the real thing without buying bars, physical gold ETFs tend to track changes in the price of gold more accurately than synthetic ones, Muhlenkamp said.Mining companies are another option for more indirect exposure. These can vary wildly in risk, so Milling-Stanley advises that investors approach these stocks with discretion. The multi-billion-dollar market-cap mining companies offer the most liquidity and stable business models. Smaller mining companies, known as junior miners, are in the exploration phase of looking for mineral deposits and might not be generating revenues, Muhlenkamp said.Mining stocks are less directly correlated with the price of gold than ETFs and may lag trends in gold prices by several months, Muhlenkamp said.In Milling-Stanley's opinion, investing in mining stocks instead of directly investing in gold erodes some of the metal's portfolio protection, as mining stocks behave more in line with the general equity market.This area of investment is definitely higher in risk, but if enthusiasm for gold continues to surge, more speculative mining stocks will enjoy the biggest upside, according to Muhlenkamp.Examples of mining stocks include Agnico-Eagle Mines (<a target="_blank" href="https://markets.businessinsider.com/stocks/aem-stock">AEM</a>) and Newmont Mining Corp (<a target="_blank" href="https://markets.businessinsider.com/stocks/nem-stock">NEM</a>).Gold royalty and streaming companies are yet another way to add gold to a portfolio. These companies finance gold mines and receive a percentage of the gold produced.Royalties limit the holder's exposure to the risks associated with directly investing in mines, such as exploration, development, and regulatory compliance. Royalty and streaming companies are a good way to gain exposure to junior mines but still retain liquidity, especially for investors who don't have the ability or resources to conduct due diligence, Muhlenkamp said.Examples of gold royalty companies include Franco-Nevada (<a target="_blank" href="https://markets.businessinsider.com/stocks/fnv-stock">FNV</a>) and Wheaton Precious Metals (<a target="_blank" href="https://markets.businessinsider.com/stocks/wpm-stock">WPM</a>).

4 ways to add gold to your portfolio as investors pile in and send prices to record highs  

<ul class="summary-list"><li>Delta's CEO questioned the financial viability of airlines struggling despite healthy travel demand.</li><li>Airlines desperate to generate revenue have flooded the market with cheap flights in recent months. </li></ul>Delta Air Lines CEO Ed Bastian had stark words for competing <a target="_blank" class="" href="https://www.businessinsider.com/flying-ultra-low-cost-airlines-spirit-frontier-not-worth-it-2024-6">airlines that depend on selling low-priced tickets</a> to stay alive. "You cannot, if you are on the lower end of the industry's food chain, continue to post losses, particularly given the health of the demand set we've seen over these last couple of years," Bastian said as Delta reported disappointing second-quarter financials and warned things could get even worse. Airlines that can't break even "will not be given the opportunity to continue to run business models they have," he added.Bastian's comments came in response to a question about the potential for structural changes within the industry as <a target="_blank" class="" href="https://www.businessinsider.com/why-airlines-are-struggling-despite-record-travel-demand-profits-revenue-2024-6">many airlines struggle to remain profitable. </a><a target="_blank" class="" href="https://www.businessinsider.com/best-and-worst-airlines-us-canada-customer-satisfaction-delta-southwest-2024-5">Delta</a>'s second-quarter profits fell by 29% compared to the previous year, a bigger decline than analysts had expected. Coupled with a lowered summer outlook, the results sent shares tumbling. A big contributor to the lower profits was lower airfares and extra capacity, especially in economy class, "Domestic industry seat growth accelerated into the summer months beyond normal demand growth," Delta president Glen Hauenstein said on the call. "This has impacted main cabin unit revenue trends through the summer."Passenger load factor, which measures how much an average flight is filled, and yield, a measure of how much money it receives to fly a single paying passenger a mile, both fell compared to a year ago.<h2 id="3dba95dd-7009-429c-997d-fc146a142f96">Oversupply is great for consumers — but hurting airlines' bottom lines </h2>In June, the <a target="_blank" href="https://data.bls.gov/pdq/SurveyOutputServlet">average price of a plane ticket</a> in the US was at its lowest in 15 years, according to Labor Department data.<div type="image" title="Ed Bastian" height="2964" width="4332" msid="111790737" hostid="261" sizebytes="343154"></div>The oversupply of seat capacity extends beyond a single airline's bottom line. As airlines struggle to generate enough revenue, they've flooded the market with flights and cut ticket prices. While many are beginning to <a target="_blank" class="" href="https://www.businessinsider.com/jetblue-cutting-20-routes-leaving-5-cities-see-list-2024-3">reel back</a> the <a target="_blank" class="" href="https://www.businessinsider.com/american-airlines-cuts-flights-boeing-787-dreamliner-delays-list-cities-2024-4">excess capacity</a>, some airlines, especially low-cost carriers, depend on selling these cheap tickets at high volumes for survival. <a target="_blank" class="" href="https://www.businessinsider.com/southwest-changes-activist-investstor-free-bags-open-seating-fees-2024-6">Southwest Airlines</a> lost $231 million in the first quarter of 2024, while fellow low-cost carriers <a target="_blank" class="" href="https://www.businessinsider.com/spirit-airlines-review-wont-use-it-certain-trips-frequent-flyer-2024-3">Spirit</a> and <a target="_blank" class="" href="https://www.businessinsider.com/spirit-frontier-fees-bags-seats-snacks-how-to-avoid-paying-2024-6">Frontier</a> lost $143 million and $26 million, respectively, during that same period.At the same time, all three low-cost carriers have reported increases in the cost of labor, aircraft, and airport operations this year.America's full-service legacy carriers like United and Delta, which in recent years has accounted for as much as 50% of the profits generated by the entire US airline industry, have diversified revenue streams to help absorb the hit from lower economy cabin profits.For example, Delta can lean on credit card partners like <a target="_blank" href="https://www.businessinsider.com/personal-finance/how-to-earn-and-redeem-delta-miles">American Express </a>to pump $1.9 billion into its coffers during the second quarter or high-margin offerings like <a target="_blank" class="" href="https://www.businessinsider.com/delta-one-new-lounge-new-york-jfk-amenities-skyclub-2024-6">DeltaOne</a> to cover lower income from economy seats.During the second quarter, 56% of Delta's revenue came from its <a target="_blank" class="" href="https://www.businessinsider.com/american-airlines-delta-premium-economy-2016-11">more expensive cabins. </a><div type="image" title="Looking over rows of Delta Premium Select international premium economy seats towards a Delta logo on board an Airbus A330-900neo." height="2400" width="3600" msid="111790739" hostid="261" sizebytes="630758"></div>Low-cost carriers don't have that benefit. Their price-sensitive customers limit their ability to raise prices. If an LCC gets too close in price to a mainline carrier, it can lose its main competitive advantage. To succeed, according to Bastian, airlines need to understand that the definition of providing value to customers, which has traditionally been having the lowest fares, no longer rings true."I'm convinced across the industry is rewarding those that are providing real value, meaning a better quality experience, better value for money in terms of the product we are offering and reliability," Bastian said.It seems America's low-cost carriers agree with Bastian's sentiments. Both Frontier and Spirit announced in May that they're cutting several of the <a target="_blank" class="" href="https://www.businessinsider.com/spirit-frontier-fees-bags-seats-snacks-how-to-avoid-paying-2024-6">ancillary fees they frequently charge passenger</a>s. At the same time, Southwest executives hinted in April of potential<a target="_blank" class="" href="https://www.businessinsider.com/southwest-is-experimenting-with-new-ways-to-speed-up-boarding-2023-3"> changes to its boarding policy</a> to help generate additional income and offer customers the option of a more premium experience.

Delta's CEO just sounded the alarm for airlines that depend on selling cheap tickets to survive

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Sun Pharma, Delta Corp, TCS and other stocks to watch out for on May 28

<ul><li>At 9:01 am, the BSE pre-open was trading 0.23% higher, indicating a positive start for the Indian benchmark index. </li><li>Here’s a list of stocks to watch for in trade today. </li><li><a href="https://www.businessinsider.in/">Check out the latest news and updates on Business Insider.</a> </li></ul>Indian stock-market indices are likely to open on a higher note on Monday, led by positive cues from the Asian markets. At 9:01 am, the BSE pre-open was trading 0.23% higher, indicating a positive start for the Indian benchmark index. Other Asian peers were trading in the positive territory as well — the SSE Composite Index was up 0.18%, SGX Nifty gained 0.52%, and the Hang Seng Index was up 22 points. These are the stocks to watch out for during the trading session today:Power Grid The board of Power Grid Corporation of India in its meeting held December 12 approved the payment of an interim dividend of ₹5 per equity share of ₹10 each for the financial year 2020-21. The interim dividend will be paid to the members on January 8. The share price of Power Grid closed 0.26% higher on Friday. Future Retail Reliance acquired Future Retail’s hypermarket chain Big Bazaar⁠— a deal <a href="https://www.businessinsider.in/business/news/future-retail-reliance-deal-bse-to-consult-sebi-after-amazons-request-heres-all-that-has-happened-so-far/articleshow/78949099.cms">challenged by Amazon</a> in Indian court⁠— is planning to open 16 more stores to take the overall count to 300 over the next three quarters. The Future Group firm, as per its expansion strategy, is expanding into the smaller tier-II cities in India, which is less impacted by the pandemic and has aspirations and an emerging consumption class. The share price of Future Retail closed 0.89% higher on Friday. Cipla Cipla on Friday announced the settlement of its patent litigation with a Bristol Myers Squibb (BMS) subsidiary on Revlimid, a drug for blood cancer. A wholly-owned subsidiary of Celgene, BMS has agreed to provide Cipla with a license to manufacture and sell certain limited volumes of generic lenalidomide drugs in the US. The share price of Cipla closed 0.88% lower on Friday. KEC International The global infrastructure major has secured new orders worth ₹1,438 crore across its various businesses. The share price of KEC International closed 0.77% lower on Friday. Delta Corp Delta Corp informed exchanges that it had received approval from the Goa Investment Promotion and Facilitation Board to set up an integrated resort consisting of hotels, convention centre, multiplex cinema, retail facilities at Pernem, Goa. The share price of Delta Corp closed 2.7% higher on Friday. Yes Bank and Sical logistics Yes Bank has sold 2.56% of the total equity in Coffee Day group-owned Sical logistics. The share price of Yes Bank closed 5% lower on Friday. Central Bank of India The capital raising committee of the Central Bank of India has approved the proposal for raising capital funds up to ₹500 crore. The share price of the Central Bank of India closed 0.33% lower on Friday. Adani Power Adani Power on Saturday said electricity regulator Maharashtra Electricity Regulatory Commission (MERC) had passed two orders, which would enable its arm APML to claim revised compensation of higher coal from Maharashtra Electricity Distribution Company Ltd (MSEDCL). The share price of Adani Power closed 5% lower on Friday. Burger King India The shares of Burger King India will hit the bourses today. The shares will be listed on both BSE and NSE. The grey market premium suggests an upside of 85% over the issue price band set at ₹59-60. SEE ALSO:<a href="https://www.businessinsider.in/tech/news/huawei-reportedly-worked-with-4-additional-companies-to-build-surveillance-tools-that-track-people-by-ethnicity-following-recent-revelations-that-it-tested-a-uighur-alarm/articleshow/79712815.cms" data-type="tilCustomLink"> Huawei reportedly worked with 4 additional companies to build surveillance tools that track people by ethnicity, following recent revelations that it tested a 'Uighur alarm'</a> <a href="https://www.businessinsider.in/international/news/an-iphone-factory-in-india-has-erupted-in-violence-over-a-dispute-about-workers-pay/articleshow/79707169.cms" data-type="tilCustomLink">An iPhone factory in India has erupted in violence over a dispute about workers' pay</a>

Top stocks to watch — Future Retail, Power Grid, Cipla, Delta Corp, Yes Bank, Adani Power and others

Shares of <keyword id="19956271" type="General" weightage="100" keywordseo="Ola-Electric-Mobility" source="keywords">Ola Electric Mobility</keyword> were in a freefall today, tanking about 4.55% on the NSE and 4.88% on BSE. Today also marked 30 days since the company was listed on the bourses (August 9th), bringing down shutters on the one-month lock-in window anchor investors are mandated to hold stocks for, before deciding to offload 50% of shareholding. Around 18.18 crore shares, or about 4% of company's outstanding shares were eligible for trading in the market post the 30-day lock-in, which hurtled Ola's stock towards Rs 100. While the stock managed to gain some ground later in the day, and was trading at Rs 114.10 when the markets closed today, slightly up from its intraday low of Rs 109. However, it still remained a far cry from its all-time high price of Rs 157.4, which it had hit on August 20th, 2024. Ola Electric, which currently dominates the Indian EV space, debuted on stock exchanges last month, and was looking to raise Rs 6,145.56 crore via fresh issue, along with an OFS (offer for sale) of 8.49 crore equity shares. The IPO was oversubscribed by around 4x. Going ahead, the Bhavish Aggarwal-led startup is also set to face intense competition from fellow EV maker Ather Energy. With its IPO set to hit the markets soo, Ather is looking to raise Rs 3,100 crore via fresh issue, and an OFS of about 2.2 crore equity shares. Per the DRHP (draft red herring prospectus) filed by Ather, its net worth for FY24 stood at Rs 545.9 crore. The remaining 50% of Ola Electric's shares will be eligible for offloading by anchor investors in 60 days from now, or 90 days since the date of allotment. While this event will certainly test Ola's buoyancy in the market, the fact remains that Ola was off to a stellar start days after its listing, when the stock price accelerated to Rs 157.4 on August 20th, 2024. This skyrocketed the company's valuation well beyond that of established Indian 2-wheeler giants like Hero Moto Corp and Bajaj, albeit briefly. In fact, for a small period, Ola Electric Mobility had recorded valuations higher than that of Tesla's. For perspective, Ola's market capitalization, as of today, stood at Rs 50,327.57 crore. Bajaj Auto, which listed on the exchanges in 2008, presently has a market value of Rs 3,02,993.79 crore, while Hero Moto Corp, which was listed in 2003, currently has a market value of Rs 1,14,788.59 crore. However, ever since hitting this peak on August 20th, Ola's prices have only been on a downward journey. However, now that the stock has witnessed a price correction of sorts, the question remains- has Ola corrected enough, or are we still in for further downside? As per SEBI registered Investment Advisor Gaurav Goel, Ola continues to trade in the expensive zone despite recent correction. "The recent mercurial rise in the stock has been more on the promise it holds for the future. It is the largest <keyword id="23099550" type="General" weightage="20" keywordseo="E-Scooter-Manufacturing" source="keywords">E-Scooter Manufacturing</keyword> company in India, with 31% market share in the E2W sector, selling 3,29,618 scooters in FY24. Recently, it also forayed into the motorcycle segment with several new “Roadster” models at an attractive pricing. It is building an Ola Gigafactory for cell production in Tamil Nadu, and a Battery Innovation Centre in Bangalore", Goel explained. "However, we feel that despite attractive future plans, the stock is currently overpriced. Despite rising revenues, we need to see how quickly it is able to translate widening losses into profits", he continued. <h2>Gaping holes, take a long-term approach </h2>It is hard to overlook the wide, year on year losses that the company continues to incur. As of March 2024, the company had racked up an operating loss of Rs 1,266 crore. Per its Q1FY25 financials, the company's losses before taxes during April-June 2024 grew to Rs 347 crore, up from Rs 267 crore in the year-ago period. The company's cash flows from operating activities continued to be in red, rising from Rs 2,520.25 crores in March 2021 to Rs 15,072.71 crore as of March 2023. Generally, if a company is regularly registering negative cash flows from its primary, operational activity, it is a troubling sign, indicating that the company is spending more than what its making. Ola continues to rack up major losses in its cell business, which reported a loss of Rs 5 crore in Q1FY25. The segment's operating expenses, however, doubled from Rs 11 crore in Q1FY24 to Rs 22 crore in Q1FY25. Per Agrawal, the indigenously developed 4680 Bharat Cell, which will be integrated in all Ola vehicles starting Q1FY26, will help in bettering the company's profit margins, given that cells constitute around 30-35% of overall vehicle's cost. Which is why experts suggest not to buy into any short-term euphoria surrounding the stock, and instead, opt for a long-term approach. While there is scope, it is largely unchartered waters, which will have to face the tides of multiple market volatilities and cycles, before it starts to generate sustainable, significant returns. Goel believes that while the new vehicle segment is a good space to enter, the competition here is going to be stiff. Customer actual response in terms of sales is yet uncertain. "We recommend a buy on dips on this stock. An entry level of Rs 100 would be good point for purchase. It should be kept for the long-term, for a period of at least 3-5 years for realization of its potential"

Shares of Ola Electric have tapered down from their record-highs. Is this a good time to buy in?

<ul class="summary-list"><li>Despite booming travel, airlines are struggling to turn a profit.</li><li>Southwest expects seat-mile revenue will decline up to 4.5%, while American predicts up to 6%.</li></ul><a target="_blank" href="https://www.businessinsider.com/why-flying-is-so-terrible-even-as-airlines-spend-billions-2023-5">Making money in the airline industry</a> has never been easy.It's a capital-heavy business with the constant need to expand and innovate while simultaneously managing ever-changing demand and costs.Expensive fuel, maintenance, and labor don't help, nor do unpredictable setbacks outside the airline's control, like pandemic travel bans and production slowdowns at planemaker <a target="_blank" href="https://www.businessinsider.com/boeing-whistleblower-said-was-threatened-to-keep-quiet-about-safety-2024-4">Boeing.</a>Despite the challenging environment, 2024 is still set to see record-breaking passenger numbers, according to the International Air Transport Association, or <a target="_blank" href="https://www.iata.org/en/pressroom/2024-releases/2024-06-03-01/">IATA</a>,<a target="_blank" href="https://www.businessinsider.com/north-america-lags-rest-world-air-travel-growth-iata-2024-4">With so many people traveling, </a>US airlines were poised for success. Some, like Delta, have found it. But across the industry, many airlines are struggling to turn profits thanks to issues like overcapacity, unrelenting competition, and unexpectedly high costs, according to experts.Take Southwest, for example, which in June <a target="_blank" href="https://www.forbes.com/sites/suzannerowankelleher/2024/06/26/southwest-guidance-activist-investor/">cut its forecasts</a> and now expects revenue per seat mile — a key financial metric for airlines — to fall by up to 4.5% where it had previously expected 1.5% to 3.5%.Before that, American in May <a target="_blank" href="https://www.cnbc.com/2024/05/28/american-airlines-outlook-chief-commercial-officer.html">warned</a> it expected the same metric to fall by 5% to 6% compared to last year. Its earlier prediction was 1% to 3%.Across the board, airlines have trailed the benchmark S&amp;P 500 index with more debt than the average publicly traded company and thinner margins.<h2 id="a747f0da-bf1e-4fc3-843e-1a4c8c95b821">Airlines got overambitious with their expansion plans</h2>Travel analyst Henry Harteveldt told Business Insider that thining margins are, in part, because airlines added too much to the market too fast amid confidence in the soaring demand and now can't sell all of those seats.<div type="image" title="Passengers check in for an American Airlines flights at O'Hare International Airport on October 11, 2022 in Chicago, Illinois." height="3648" width="5472" msid="111363746" hostid="261" sizebytes="801342"></div><a target="_blank" href="https://www.reuters.com/business/aerospace-defense/american-airlines-cuts-second-quarter-profit-forecast-2024-05-28/">Reuters</a> reported American hurt its pricing power after aggressive growth in its domestic market. The airline also missed out on revenue from <a target="_blank" href="https://www.businessinsider.com/american-airlines-ceo-admits-ticket-sales-strategy-change-mistake-2024-5">corporate customers due to a flawed ticket sale strategy</a> it has since admitted was a mistake to adopt."We're seeing softness in customer bookings relative to our expectations that we believe is in part due to the changes that we have made to our sales and distribution strategy," American CEO Robert Isom <a target="_blank" href="https://seekingalpha.com/article/4696281-american-airlines-group-inc-aal-bernstein-strategic-decisions-conference-transcript">said</a> during a May conference.Southwest also <a target="_blank" href="https://otp.tools.investis.com/clients/us/southwest/SEC/sec-show.aspx?Type=html&amp;FilingId=17642687&amp;CIK=0000092380&amp;Index=10000">cited</a> its struggle to predict demand as part of its revenue problem. And, unlike <a target="_blank" href="https://www.businessinsider.com/flying-ultra-low-cost-airlines-spirit-frontier-not-worth-it-2024-6">ultra-low-cost carriers</a>, Southwest doesn't charge extra for ancillaries like bags or seats — another missed revenue opportunity.In fact, <a target="_blank" href="https://www.businessinsider.com/southwest-airlines-call-for-changes-new-leadership-ceo-elliott-management-2024-6">activist firm Elliott Investment Management recently pumped nearly $2 billion</a> into Southwest, questioning strategies like its lack of add-on fees and calling for a board shake-up and the firing of Southwest CEO Bob Jordan.<h2 id="d2a52b4a-3d28-4f0b-9efd-98139d9092e8">Business travelers are booking fewer last-minute premium-priced tickets</h2>Part of the industry's overcapacity problem is because lucrative business travel still <a target="_blank" href="https://skift.com/2024/03/14/business-travel-could-stage-a-full-pandemic-recovery-in-2024/">hasn't</a> completely rebounded since the pandemic, Harry Kraemer, former CFO and CEO of healthcare firm Baxter International, told BI.Corporations aren't spending as much on last-minute business travel since the pandemic made Zoom and Google Meet more convenient."Half of the market is gone, and it's their highest margin," Kraemer said. "You've got all this excess capacity, and you've bought these planes, so what are you going to do with them."Further, Harteveldt said companies have become more price-sensitive and are looking for cheaper options, noting ULCCs Frontier and Spirit are even getting business customers.<div type="image" title="Frontier and Spirit planes on parallel runways." height="671" width="1024" msid="111363750" hostid="261" sizebytes="66842"></div>Over the past 12 months, shares of Spirit and Frontier have declined roughly 79% and 50%, respectively, far underperforming competitors and the market.In an effort to boost revenue, they've changed their strategies to capitalize on the demand for more premium perks, such as dropping change and cancel fees and creating "business" class-like seats.<h2 id="6389725c-7fc3-4d87-b301-17d0248f2bff">Boeing delivery delays have eaten into profits</h2>Harteveldt said <a target="_blank" href="https://www.businessinsider.com/boeing-door-plug-blowout-tanked-alaska-united-airlines-earnings-2024-4">Boeing's ongoing delivery delays have cost airlines</a> like American, Southwest, and United millions of dollars. This has forced them to adjust their planned flying, impacting revenue opportunities and flight availability.He also said the lack of new planes means airlines are flying older ones for a longer time. The costs of maintenance and lesser efficiency can add up, and customers can't get access to the nicer amenities and reliability of newer jets.<div type="image" title="Boeing 737 MAX airplanes are pictured outside a Boeing factory on March 25, 2024 in Renton, Washington." height="4201" width="7000" msid="111363756" hostid="261" sizebytes="604068"></div><a target="_blank" href="https://www.businessinsider.com/avelo-tiny-low-cost-airline-expanding-new-cities-list-2024-4">Airlines need to expand with new routes</a> and planes, he said — it's the nature of the highly competitive industry.However, Harteveldt noted these forced network shake-ups, like <a target="_blank" href="https://www.businessinsider.com/southwest-leaving-these-4-airports-amid-boeing-737-max-crisis-2024-4">Southwest's exit from four airports</a>, could be beneficial for better leveraging airline pricing power, as capacity can be brought back in line with demand."The airlines should find and serve routes that are the most profitable, and that means they may need to increase capacity in some markets and completely exit others," he said.Low-cost competitor <a target="_blank" href="https://news.jetblue.com/latest-news/press-release-details/2024/JetBlue-Announces-Termination-of-Merger-Agreement-with-Spirit/default.aspx">JetBlue Airways</a> overhauled its network to stay above water after its failed merger with Spirit.Harteveldt noted that <a target="_blank" href="https://www.businessinsider.com/airbus-lowers-targets-after-benefiting-from-boeing-struggles-2024-6">Airbus is also facing production setbacks that are</a> impacting deliveries and worrying investors, though not as dire as Boeing.<h2 id="374ee9ec-da65-4119-a789-f37c06ab3c0c">Airlines are plagued by high costs in an extremely competitive industry</h2><a target="_blank" href="https://www.businessinsider.com/hate-spending-consumers-economic-sentiment-retail-sales-inflation-gdp-growth-2024-4">Nearly everything is more expensive</a> than it was before the pandemic, and airlines are no exception."It's the worst possible combination of high fixed costs and inflation on the variable costs," Kraemer said, pointing to costs like planes, labor, and fuel. "There are so many permanent changes like virtual meetings that airlines will need several years to adjust for."Fuel costs in April were 33% higher than they were during the same time in 2019, according to the most recent <a target="_blank" href="https://www.bts.gov/newsroom/us-airlines-april-2024-fuel-cost-gallon-down-06-march-2024-aviation-fuel-consumption-54-0#:~:text=Year%2Dover%2Dyear%20changes%20in,increasing%205.2%25%20from%20April%202019.">report</a> from the Bureau of Labor Statistics. Meanwhile, <a target="_blank" href="https://www.businessinsider.com/airline-pilot-pay-salary-american-delta-united-captain-first-officer-2024-4">US airline pilots have gotten huge pay raises</a> in recent years to help fend off a labor shortage.For low-cost carriers like Frontier and Spirit, these high costs make it challenging to make money, Kraemer said. Still, they force competitor fares down — creating another profit obstacle for mainline carriers. <a target="_blank" href="https://www.iata.org/en/iata-repository/publications/economic-reports/global-outlook-for-air-transport-june-2024-report/">IATA</a> reported in June that <a target="_blank" href="https://www.businessinsider.com/flight-ticket-prices-cheaper-inflation-united-american-delta-junk-fees-2024-6">industry ticket prices, including ancillary, are 15% below 2019 levels</a> despite high growth.<div type="image" title="Spirit Airlines bag check" height="724" width="1086" msid="111363748" hostid="261" sizebytes="64150"></div>Harteveldt said beefing up revenue in any way possible is the best way to counteract the ever-growing costs."These days, it's less about having the <a target="_blank" href="https://www.businessinsider.com/best-time-buy-plane-tickets-travel-fly-airfare-airlines-inflation-2023-11">lowest costs</a> and more about generating the most revenue," he said, suggesting strategies such as charging for more ancillaries, reducing the number of discount tickets sold, or creating more enticing bundle packages.

Airlines got too confident, and now they are paying the price despite record-breaking travel

<ul class="summary-list"><li>MicroStrategy is the latest company to announce a 10-for-1 stock split as its shares hit $1,340.</li><li>Record-high prices for stocks popular with investors have driven a stock-split boom this year. </li></ul>It's been a big year for stock splits. <a target="_blank" href="https://markets.businessinsider.com/stocks/mstr-stock?miRedirects=1">MicroStrategy</a> became the latest company to announce a split on Thursday, with a 10-for-1 share split set to go into effect in early August as its shares hover around $1,340.Other major companies that have implemented stock splits or announced plans to do so this year include <a target="_blank" href="https://markets.businessinsider.com/stocks/nvda-stock?miRedirects=1">Nvidia</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/wmt-stock?miRedirects=1">Walmart</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/avgo-stock?miRedirects=1">Broadcom</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/cmg-stock?miRedirects=1">Chipotle</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/wsm-stock?miRedirects=1">Williams-Sonoma</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/ctas-stock?miRedirects=1">Cintas</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/sony-stock?miRedirects=1">Sony</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/lrcx-stock?miRedirects=1">Lam Research</a>, and <a target="_blank" href="https://markets.businessinsider.com/stocks/tpl-stock?miRedirects=1">Texas Pacific Land.</a>So, why are so many firms splitting their stock? Simply put, they want to attract more investors. Many stocks that split this year are household names, like Nvidia, which has become nearly synonymous with AI. The pricier and more popular the stock, the more likely it is to split, one expert said. "The market is up — a lot — and the most popular stocks among individual investors are among those leading the charge. The rise in the market means that more stocks are now expensive enough to justify a split while the popularity with individuals is what prompts managements to consider splits," Interactive Brokers chief strategist Steve Sosnick told Business Insider. "Frankly, if a stock has little interest from individuals, then there is little reason for a company to consider splitting."As to which stocks could be ripe for a split, Sosnick pointed to a handful of names trading above $500 a share as potential candidates. He highlighted companies like <a target="_blank" href="https://markets.businessinsider.com/stocks/azo-stock?miRedirects=1">Autozone</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/meli-stock?miRedirects=1">MercadoLibre</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/lly-stock?miRedirects=1">Eli Lilly</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/klac-stock?miRedirects=1">KLA Corp</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/nflx-stock?miRedirects=1">Netflix</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/intu-stock?miRedirects=1">Intuit</a>, <a target="_blank" href="https://markets.businessinsider.com/stocks/adbe-stock?miRedirects=1">Adobe</a>, and <a target="_blank" href="https://markets.businessinsider.com/stocks/meta-stock?miRedirects=1">Meta Platforms</a>. According to <a target="_blank" href="https://markets.businessinsider.com/stocks/bac-stock?miRedirects=1">Bank of America</a>, stock splits can be rocket fuel for prices. "Average returns one year later are 25% vs. around 12% for the broad market. Splits seem to be bullish across market regimes, something management teams might consider if shares look too expensive for buybacks," Bank of America <a target="_blank" href="https://www.businessinsider.com/stock-splits-are-bullish-high-priced-sp500-stocks-next-nvidia-2024-5">said in a note in May.</a><div type="image" title="Stock splits are bullish" height="507" width="783" msid="111669487" hostid="261" sizebytes="25064"></div>But according to Sosnick, stock splits can also have a "buy the rumor, sell the news" impact on the share price, at least in the short term."Because they don't change the underlying value of the company, it is not uncommon to see a run-up in advance of the split, then a sell-off when no new demand arrives. [Chipotle] is a good recent example of this," Sosnick said.Shares of Chipotle have dropped 12% since its shares split 50-for-1 in late June. It represented one of the largest stock splits in the history of the New York Stock Exchange.

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