Airline stocks sink, Peloton stock tumbles, Luminar shares soar

Yahoo Finance's Emily McCormick and Adam Shapiro discuss how revenues for airlines are declining amid the surge in Omicron cases, Peloton shares are falling today, and Luminar stock is rising on reports of a self-driving deal with Mercedes-Benz.

Video transcript

ADAM SHAPIRO: Before we get to our next segment, let's do our 2&2, two stocks that Emily is watching, two stocks that I'm watching. And want to pay attention to the airlines. Let's first pull up United. They reported after the bell yesterday. We got their earnings call today, and the shares are trading down. Now United is different than the other big airlines like Delta and American in that 50% of United's revenue pre-pandemic came from international travel.

So although the recovery is well underway, that 2021 fourth quarter and going forward, reservations for visiting friends and family, the leisure domestic travel, back to where it was in 2019, Omicron is having an impact not only on the staffing levels, but on people who are canceling reservations and slowing down bookings.

So where they stand right now, according to Scott Kirby, is that revenue in the fourth quarter better than expected, $8.19 billion, but they are still projecting that in the first quarter of this year, they're going to be 20% to 25% off from where they were in 2019. And Omicron is going to impact the speed of their recovery. In fact, he said, quote, "Near-term demand, we remain optimistic about the spring and excited about the summer and beyond." In other words, first quarter, not so much.

OK, take a look at American Airlines. A couple of good things about American, even though they are trading down right now. Let's go right to their debt situation. At the end of the quarter, they had about $15 billion in liquidity. And that's the highest amount they've had during the pandemic-- very important.

And also the highest revenue during the pandemic for them came in at $9.43 billion. It's down compared to where it would have been pre-pandemic at $11.3 billion. They lost $931 million in the quarter, but they hired 16,000 people last quarter-- last year rather. And they're going to hire 18,000 this year. So in the words of Doug Parker, Omicron, quote, "This volatility has created the most challenging planning environment in the history of commercial aviation." You think? Emily.

EMILY MCCORMICK: Adam, speaking of volatility, take a look at shares of Peloton. Now another rough session for this stock. And this is after CNBC first reported this afternoon that the company was halting production of its connected fitness products due to declining customer demand and as a means of reining in costs. Now according to that report, Peloton will pause its connected bike production for two months until March. And production for its more expensive Bike+ will be halted until June. Now it's also reportedly planning a six-week pause on manufacturing its basic treadmill starting next month and likely won't produce any new Tread+ products this fiscal year.

Now shares have fallen more than 20% today following this report. And that also triggered multiple volatility halts in these shares. Those have also fallen below the stock's IPO price of $29 a share back from September 2019. And this is all really extending a slide that we've seen in Peloton stock that picked up in earnest after it first reported fiscal first quarter results in early November and, at that time, had slashed its full year forecast in that report. Now shares have fallen by about 80% over the past six months.

Now meanwhile, a different story for shares of Luminar Technologies. As we could see, that stock is solidly in the green today. And that's after Mercedes-Benz said today it plans to use Luminar's lidar technology for its next gen vehicles featuring highly automated driving technologies. Now as part of that deal, Mercedes-Benz is also set to acquire up to 1 and 1/2 million shares of Luminar as certain milestones in this partnership are met. And this is just the latest deal with a major automaker for Luminar, which just last year had announced that Volvo would be also using the company's lidar tech on a new electric SUV.

Now in terms of this deal with Mercedes-Benz, we don't yet know a timeline for when the company will integrate Luminar's lidar sensors into its production vehicles, which models will ultimately be getting these sensors, or ultimately, the extent of the autonomous capabilities that this will help generate for Mercedes-Benz. But nevertheless, another major deal for Luminar, and that stock is soaring today. Adam.