Controversy over how United Airlines removed a passenger from an overbooked flight has sent the company’s stock on a roller coaster ride so far this week.
On Monday, the stock price actually went up 0.9 percent, adding nearly $200 million to the company’s market cap. In fact, some pundits said on Monday that the airline’s stock wouldn’t be affected by the release of the video, which showed a passenger being forcibly dragged off a jet, and which set of a maelstrom on social media.
But all of that changed as of Tuesday morning, when shares of United fell as much as 6.3 percent in pre-market trading.
Share prices had rebounded slightly by mid-afternoon, to down 3.1 percent. If the price stays in that range, at closing bell United’s market cap will be down by $682 million.
Market cap is short for market capitalization, which is the value of a company that’s traded on the stock market – it’s calculated by multiplying the total number of shares by the current share price.
The carrier is on pace to be down around 2.8 percent for the week. That will reduce the airline’s market value by upwards of $600 million since close of business Friday, according to MarketWatch.
The drop in United Airlines stock follows release of the viral video, which shows a passenger being forcibly removed from a flight that had been overbooked. On Monday, United Airlines CEO Oscar Munez apologized for the incident, while separately saying he stands behind airline staff.
After the video went viral on Monday, Munez called it an upsetting event. “I apologize for having to re-accommodate these customers,” Munoz said in a statement. “Our team is moving with a sense of urgency to work with the authorities and conduct our own detailed review of what happened. We are also reaching out to this passenger to talk directly to him and further address and resolve this situation.”
But then later, he sent an email to staff, in which he sided with them in the incident. In the leaked message to staff, according to CNBC he told them he “emphatically” stands behind them and commended them for going “above and beyond.”
But what does this mean for United stock prices, long-term? Financial analysts say investors still love airlines, although they are volatile.