Ryanair reported impressive traffic figures for August 2024. The number of passengers carried by the company’s flights reached 20.5 million in August 2024, an 8% increase compared to the previous year. The load factor (percentage of seats filled by passengers) in August stood at 96%, remaining unchanged both sequentially and year-over-year.

Additionally, a stock split is scheduled for September 30. ParadTrade provides more details about this event.

What is a stock split?

A stock split is an increase in the number of shares in circulation through a proportional division of each original share. The goal of a stock split is to make overly expensive securities more accessible, allowing more traders to participate in the market. It is also done to attract a fresh influx of investments. During this procedure, no new shares are issued.

For example, if a company had 1 million shares in circulation and the split is done at a two-to-one ratio, then after the split there will be 2 million shares, each priced at half the original value. Every holder of 100 previous shares will now own 200 new shares. The nominal value of the shares decreases proportionally (by half).

After the split, the price initially drops, and holders of larger packages may buy up shares from others to strengthen their positions.

A stock split can send a positive signal from the issuer about its successful development and future prospects, boosting investor confidence in the company. However, sometimes companies split shares when their prices fall, in an attempt to increase demand for the assets.

Example of a stock split

For example, take Apple’s last stock split on August 31, 2020. The stock closed at $129, and by November 5, it was $116.5, representing a 9.7% decrease. The main growth driver in the fall is often the presentation of new company products. In September, no new iPhone or MacBook was shown to investors, which contributed to the lack of growth. A similar situation occurred with Tesla’s stock split — no growth drivers and the price dropped significantly.

About 90 days after the split, there’s typically growth. However, it’s important to remember that splits are conducted by large companies that have experienced significant price increases and want their shares to become more accessible. In the long term, what rises will continue to grow.

Who is conducting a split now?

Ryanair is an Irish ultra-low-cost airline founded in 1984. Its headquarters are in Dublin, Ireland. It is the largest airline in Ireland, and in 2016 it became the world’s largest airline by the number of regular international passengers.

Why is Ryanair a profitable company to invest in? Ryanair’s planes have never been involved in major air crashes, and they are leased for elite private flights. Additionally, the airline uses only one model of aircraft, and in the company’s entire history, only three emergency incidents have been recorded, with no fatalities.

The most serious incident involving a Ryanair plane in the company’s 33-year history was an emergency landing in Rome in 2008. The incident occurred due to the aircraft colliding with a flock of about 90 starlings. Upon landing, the left landing gear failed, and the plane grazed the runway. As a result, the aircraft sustained irreparable damage.

Overall, a quick look at the company’s price trend shows that its shares have experienced impressive growth on the stock exchange. For example, last year, Ryanair’s shares rose by 79%, compared to a 15.4% increase in the industry to which they belong.

Why is the company conducting a split?

Ryanair has conducted four stock splits throughout its existence. The fifth split will take place on September 30, 2024, with a 2.5-to-1 ratio.

Despite its successes, the company has faced challenges recently. The COVID-19 pandemic and the war in Ukraine left a mark — Ryanair withdrew from 19 airports. Despite stable growth over the past decade and a network of over 200 routes, Ryanair had to abandon some destinations. Among them are several British airports that were either taken over by other carriers or closed to passenger flights.

Ryanair also withdrew from Gothenburg, Hamburg, and Malmö, but later returned, as well as from Maribor and Toulon, where business did not resume. The company also left the Italian city of Rimini but triumphantly returned in 2018.

Over the past year, reporting data consistently exceeded forecasts but remained in negative territory, which led the company’s management to decide on a stock split.

We wish you successful trading and great profits!