Buy or Sell Delta Air Lines Stock Ahead of Its Upcoming Earnings?

Core Insights - Delta Air Lines is expected to report earnings of $2.03 per share on revenue of $16.18 billion for the upcoming quarter, a decrease from $2.36 per share and $16.66 billion in the same quarter last year [3] - The stock has shown a negative one-day return following earnings announcements in 70% of the cases over the past five years, with a median drop of -2.7% [2][6] - Year-to-date, Delta's stock has declined by 14%, contrasting with a 7% increase in the S&P 500 index, likely due to decreased air travel demand influenced by geopolitical tensions and economic uncertainty [4] Financial Performance - Over the past twelve months, Delta reported revenues of $62 billion, with operating profits of $6.0 billion and a net income of $3.7 billion [5] - Historical data indicates that positive one-day returns occurred around 30% of the time following earnings announcements, with a median positive return of 5.1% and a median negative return of -2.7% [6][10] Trading Strategies - Event-driven traders may benefit from understanding historical trends and adjusting their positions based on the correlation between short-term and medium-term returns following earnings announcements [7][8] - A strategy involving taking a "long" position for the next 5 days after a positive one-day post-earnings return may be effective if the correlation between 1D and 5D returns is strong [8]