What happened

Shares of Wheels Up Experience (UP -5.64%) soared 11% higher on Wednesday after the private aviation membership service was initiated with an outperform rating by one Wall Street analyst.

So what

Wheels Up has been around for seven years, but it only went public a few months ago via a merger with a special purpose acquisition company (SPAC). The stock has flown through some turbulence since it began trading, down more than 40% prior to Wednesday.

A pilot looks over his shoulder from the cockpit of a business jet.

Image source: Getty Images.

But Raymond James analyst Aaron Kessler sees promise in the provider of jet transportation services for members, initiating coverage with an outperform rating and a $10 per share price target. Kessler said the private aviation total addressable market is large and growing, and Wheels Up has established itself as a market leader.

The analyst likes Wheels Up's membership model, which provides predictable revenue, and believes availability of planes will allow the company to scale up efficiently.

Now what

I agree with Kessler there is a lot of promise to Wheels Up, and in a post-COVID environment demand for convenient and relatively affordable access to private aviation is likely to grow. But it might not be enough to prevent Wheels Up from flying through turbulence in the near term. The company has a relatively small number of shares available for trading, which tends to lead to more dramatic price swings. And if the stock price does rise, institutional holders who are no longer restricted from selling could decide to cash out at least parts of their stakes.

This is a young company selling into a still-developing market, so some caution is advised. But for those who can ride through the headwinds without getting air sick, there are solid reasons to make Wheels Up a part of a well-diversified portfolio.