What happened

Shares of Wheels Up Experience (UP 2.42%) gained more than 10% on Friday after a Wall Street analyst initiated coverage of the stock with an outperform rating. These sorts of jumps haven't held for Wheels Up in the past, but investors are excited about the private aviation service today.

So what

Wheels Up has had a turbulent start to life as a public company. The small jet-transportation provider went public earlier this year via a merger with a special purpose acquisition company (SPAC). The stock has lost more than one-third of its value in the months since, however, as investors weigh the potential of the opportunity against current operating losses.

A passenger on board a private jet.

Image source: Getty Images.

Credit Suisse analyst Stephen Ju is a believer. On Friday, he initiated coverage with an outperform rating and a $14 price target.

The analyst is excited about Wheels Up's release of a non-membership option allowing fliers to buy flights without locking in a membership. Ju believes this will allow Wheels Up to lower the cost of flights over time by bringing a larger number of people to its platform and allowing passengers to share flights, instead of booking solo.

Ju believes Wheels Up will eventually be able to reduce the cost of private flying by about 50%, and as it does, it will grow demand and expand its total addressable market from $31 billion today to $80 billion eventually. Wheels Up also has a partnership with Delta Air Lines that should help support growth.

Now what

If this all sounds familiar, there's a good reason. Last month, Wheels Up soared 11% higher when another Wall Street analyst initiated coverage with a bullish note, only to give up all those gains as the month went on. The stock got a similarly short-lived boost in mid-August when a third Wall Street bank initiated coverage with a buy.

UP Chart

UP data by YCharts.

Time will tell whether this spike higher fades, as well. Wheels Up has an interesting approach to making private aviation accessible to more customers, and with airlines scaling back on growth, and passengers eager to avoid crowded airports, there's certainly an opportunity here.

Still, these are early days for a company that's valued by the market at more than $1.7 billion, despite generating just $285.6 million in sales in its most recent quarter and reporting a net loss of $29 million. Investors intrigued by the potential need to understand the risks that come with getting in early and should keep stocks like Wheels Up as a small part of a diversified portfolio.