Please ensure Javascript is enabled for purposes of website accessibility

Stock Market News: Southwest Expects May Pain; Enphase Gets Energized

By Dan Caplinger – Apr 28, 2020 at 11:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The stock market was mixed on Tuesday morning.

Investors have enjoyed a big bounce from the recent lows after the lightning bear market of February and early March, as they've balanced hopes against fears about what the consequences of the coronavirus pandemic on the global economy will be. Optimism sent share prices generally higher at the open, but later in the morning, a more somber mood crept in among market participants. Just before 11 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 42 points to 24,176, and the S&P 500 (SNPINDEX: ^GSPC) rose 2 points to 2,880. However, the Nasdaq Composite (^IXIC) moved lower by 58 points to 8,672.

News among individual stocks was similarly mixed. Southwest Airlines (LUV -0.60%) foresees a painful month in May as airlines try to adapt to what the next stage of the pandemic might look like. Meanwhile, Enphase Energy (ENPH -9.24%) got good news that lifted its shares in anticipation of its quarterly report next week.

Severe turbulence for Southwest

Southwest Airlines saw its stock fall nearly 2% Tuesday morning. That's not a violent move for a stock that's lost half its value in the past few months, but the latest operational news from the airline didn't inspire much confidence among investors.

Southwest-painted airplane on a ramp at an airport in a desert location.

Image source: Southwest Airlines.

Southwest's first-quarter financial results included its first quarterly loss in nine years, amounting to $0.15 per share on an adjusted basis. Revenue for the quarter was down 18% year over year, with load factors falling more than 13 percentage points from year-ago levels. Even worse, Southwest sees revenue falling 90% to 95% in both April and May, with load factors of roughly 6% this month and between 5% and 10% next month. Southwest said it's "unable to reasonably estimate trends beyond May."

The airline took the opportunity to raise new capital, with both stock and bond offerings. A convertible senior note offering should raise about $1 billion, and Southwest will sell 55 million shares in a secondary stock offering. At current prices, the newly issued stock would bring in about $1.6 billion.

Southwest has a strong reputation for being profitable, so the loss accentuates the struggles that airlines are having right now. Investors can only hope that once coronavirus conditions in the U.S. get better, Southwest will be able to bounce back in a safe, yet profitable, way to meet travel needs going forward.

S&P lights up Enphase

Elsewhere, shares of Enphase Energy moved higher by 10%. The solar power micro-inverter specialist got good news from managers of a key stock index, reflecting Enphase's growth in recent years.

S&P Dow Jones Indices will add Enphase Energy to the S&P MidCap 400 index as part of a series of moves to fill vacancies. A couple of stocks in the index manager's small-cap index filed for bankruptcy protection recently, and S&P Dow Jones pushed two former members of the MidCap 400 down to take their places. That opened up two spots, one of which Enphase claimed.

Enphase's components are integral to making maximum use of solar panels in an efficient manner. They've historically been part of millions of solar power systems in countries across the world, gaining traction with installers. Yet Enphase isn't resting on its laurels; instead, it's looking to introduce a new generation of micro-inverters later this year. The new system will allow those who don't want to interconnect with the power grid to use the products, gaining efficiency.

Enphase has a lot of growth ahead of it. With prospects to build solar technology into energy storage systems and other innovations, investors will have their eyes on the newly dubbed mid-cap stock when it reports its latest results on May 5.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Southwest Airlines. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Southwest Airlines Stock Quote
Southwest Airlines
LUV
$32.99 (-0.60%) $0.20
Enphase Energy, Inc. Stock Quote
Enphase Energy, Inc.
ENPH
$261.60 (-9.24%) $-26.65
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,176.41 (%)

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.