easyJet (LSE: EZJ) shares have been popular with UK investors since they nosedived during the Covid-19 pandemic. But they haven’t exactly been a good investment recently. Here’s a look at how much money I’d have today if I’d invested £5,000 in the airline’s stock at the start of 2022.
easyJet shares: I would have lost money this year
At the start of 2022, easyJet shares were trading at 556p. As I write on Friday morning however, they’re trading at 352p. That equates to a decline of 36.7%.
This means that if I had invested £5,000 of my hard-earned money in the stock at the start of the year, that money would now be worth just £3,165 (ignoring trading commissions). Ouch!
What about dividends though? Well, unfortunately, easyJet hasn’t paid any to its investors for a few years now, due to the fact the pandemic has impacted profits and cash flows quite significantly. So I would have received no income from the stock at all in 2022, meaning £3,165 is all I’d have for my troubles.
It’s worth pointing out that if I had bought the stock at the start of 2022, I would have owned it for less than 10 months. That’s a rather short holding period. Generally, experts recommend holding shares for at least five years. In the long run, the stock could recover.
However, I’d still be disappointed if my £5,000 investment had fallen by that much. I’d have to make a gain of nearly 60% from here just to break even.
3 takeaways from the EZJ share price fall
Looking at the performance of easyJet shares, there are a few takeaways, to my mind. One is that, just because a stock has fallen a long way doesn’t mean it will automatically rebound.
Before Covid, easyJet shares were trading near the 1,250p mark (after accounting for recent rights issues). So, at the start of 2022, the stock was more than 50% below its pre-Covid-19 levels. I imagine there were a lot of investors who looked at the large share price fall and bought stock, hoping for a big rebound. Unfortunately, the stock has kept losing altitude.
Another is that there’s a lot that can go wrong with airline stocks. They can experience challenges related to operational issues, staffing, fuel costs, government restrictions, and much more. And this is reflected in easyJet’s recent results. While demand for flights has been quite healthy of late, other issues have hit profits (and the share price).
A third takeaway here is that when investing in stocks, it’s crucial to diversify. If I only owned a handful of stocks and one of them was easyJet, my overall portfolio would have taken a big hit in 2022. However, if I owned 20 or more stocks (as I do), the fall here would not have been the end of the world for me.