Tuesday, April 11, 2017
United Airlines just lost $800 million in value
Please buckle up, there's some turbulence ahead.
United Continental has lost about $800 million in total value on Tuesday, the day after a video of a man being dragged off a flight became a major news story.
Shares in the company had declined about 3.8 percent in mid-morning trading, a steep drop for a major company like United.
The controversy began on Monday morning when video emerged of a man being violently dragged off a United Airlines flight. The man, who had been seated on the plane, was then asked to leave because the flight had been overbooked. When he refused, a Chicago police officer grabbed him.
Full price informationSince then, United has been dealing with severe backlash.
By comparison, Pepsi, another company caught in a public fiasco (its tone-deaf commercial featuring protests and Kendall Jenner), hasn't seen much change at all.
The chart below shows United's market capitalization over the last five days. Market cap is a generally accepted way to value companies based on stock price.
The decline highlights just how serious a situation United faces. Airplane travel rarely tops the list of quality consumer experiences, but Monday's video appears to have set off a serious discussion around United, the airline industry, and police procedure.
Tuesday's stock decline is surprising in part because it did not seem like investors were particularly worried on Monday as the controversy started.
Continental is still worth around $21.8 billion dollars, so the company isn't exactly in dire straits. There's also broader concern that while United might have a mess on its hands, years of mergers in the airlines industry have given consumers little choice when traveling.