What happened

Frontier Group Holdings (ULCC -6.39%) lost less money than expected in the first quarter, but in the report it delivered after the bell Wednesday, management trimmed its growth outlook and warned of cost pressures. Concerned investors sent shares of Frontier down by as much as 20% on Thursday morning. As of 1:10 p.m. ET, shares were still off by 18.3%.

So what

Frontier lost $0.06 per share in the first quarter on revenue of $848 million. The loss was $0.02 per share less than expected, and revenue was up 40% year over year.

But Frontier also said it is adjusting its capacity plans for the months to come to reflect post-pandemic demand trends, and management said it expects some inflationary cost pressures up ahead. Specifically, Frontier is seeing lower traffic on Tuesdays and Wednesdays, and higher demand closer to weekends.

"Post-pandemic demand has increased due, in part, to work from home arrangements and flexible working schedules," CEO Barry Biffle said in the earnings press release. "Having analyzed this new customer behavior, we are reshaping our capacity beginning in the second quarter to exploit this post-pandemic demand dynamic, and expect the changes to be fully deployed in the second half of 2023."

The move prompted Susquehanna analyst Christopher Stathoulopoulos to downgrade Frontier from positive to neutral, and to lower his price target to $10 from $12. Stathoulopoulos said that the decision to adjust capacity makes strategic sense, but he warned that the cuts put Frontier's growth profile at risk.

The analyst is also worried Frontier will have a hard time adding planes at the rate it plans to, which could lead to capacity and cost issues.

At least one other analyst, Cowen's Helene Becker, also lowered her price target on Frontier to $16 from $19, but kept an outperform rating on the shares.

Now what

With its industry-low costs and massive airplane order book, Frontier is one of the more intriguing growth stories among airline stocks. That hasn't changed, but at least some on Wall Street are worried about how quickly Frontier will be able to kick-start that growth.

For long-term-focused investors, there is no need for panic, as Frontier remains on the right course. But if Wall Street is correct, the next few quarters could feature some turbulence, so investors should buckle up.