Is Wheels Up Experience a Busted SPAC Play?

  • The concerns with the Wheels Up stock
  • Why Wheels Up Experince has been trading lower than its potential

(PRNewsfoto/Wheels Up)

Since Wheels Ups SPAC merger deal in July, the UP stock has been declining rapidly. Wheels Up Experience has the potential to transform the private aviation industry but there are concerns, some of which are widespread among SPACs and others endemic to Wheels Up itself. At the moment, there are dozens of stocks like Wheels Up Experience (UP) in the market, The question for UP stock, as with nearly all of these names, is whether the decline is due to short-term trading dynamics or a correction in the market’s long-term assessment of the business.

As with so many SPACs, the story from the company is that there’s a massive, untapped opportunity that only Wheels Up can truly serve. But recent trading shows that investors are not buying very many of those stories right now, and certainly not the one that Wheels Up is telling.

It’s tempting in that context to see Wheels Up as a pandemic winner, but that doesn’t appear correct when looking at market share figures. By hours, Wheels Up last year moved from 11th to 3rd among U.S. private jet operators, behind only Berkshire Hathaway (BRK.A) (BRK.B) unit NetJets and Directional Aviation’s FlexJet. Even though the pandemic no doubt did help, it also allowed the company to acquire customers who aren’t necessarily going to be lost once normalcy finally and mercifully returns; among spenders above $25,000 annually, Wheels Up historically has seen ~90% retention, and management said after Q2 that figure is holding up so far in 2021.

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