Catching A Falling Knife. Is Buying AirAsia Stocks A Good Decision?

Hello Grasshoppa,

As I am writing this post, I am currently on a flight to KL to conduct a talk on my experience as a former MMA fighter & my journey in staying fit. If you have followed by blog so far, you may have noticed this is the first time I am writing specifically on a particular stock as I personally do not believe in recommending people which stocks to buy since different individual have different risk appetite.

AirAsia Flight Mr Bean

You all may have noticed the recent controversy surrounding AirAsia. The news have gotten really big for the past few days. Since I started to invest many years ago, AirAsia stocks have been one of the stocks under my watch list but I did not purchase any of the stocks until mid of last year when I saw the value in the stocks & also some discussion with The Stockmonger. During that time, AirAsia was trading at RM2.01 & within a few months, the stock price kept going down to RM1.68 in December 2019. Those are all the prices that I actually bought at & their NTA went down from RM2.47 to RM1.38 during their third quarter. Their overall profit went down as well comparing between 2018 & 2019.

As you may know, recently MACC is investigating a bribe claims against two AirAsia executives . Prior to this news, EPF has also disposed a huge amount of AirAsia stocks between 28th & 29th January. MACC investigation news was posted on Saturday & when I read about it, I have foreseen that their stocks may go down on Monday morning itself. I was right as on Monday morning between 9am-9.25am, their stocks were dropping significantly as there was huge sell off. I managed to get it at RM1.29 on Monday itself.

Cheap AirAsia Stocks

When Tony Fernandes & Kamarudin relinquish their executive post, AirAsia took another hit where their stock price was trading between RM1.15-RM1.18 between 2.30pm-3.30pm. I managed to get in at RM1.17 on that day. During this time, I actually texted a friend of mine to ask him to get it too as this is a good time to buy. My observation may be wrong but I actually analyse AirAsia stock price based on below criteria.

1. Market Reaction During MACC Announcement 
2. Market Reaction Upon AirAsia Announcement (Tony & Kamarudin relinquish their executive post during the investigation)
3. Market Reaction Once MACC Investigation Concluded

Since MACC investigation has yet to be concluded, AirAsia stocks may remain as it is but the investigation result may lead their price to go higher or maybe even lower. Tun Mahathir recent comments have moved the stocks up again which means it’s a quick profit for some traders out there that went in on Tuesday. AirAsia price closed at RM1.31 on Friday. Aside from this recent investigation done by MACC, many have also claimed that AirAsia stock price are affected because of Corona virus issue.

Travel Safe AirAsia

What Are My Thoughts On This?

1. People Will Still Be Flying But It Will Be Slower 
There will be certain flight cancellations in & out of China. Many people will be afraid of flying too. Does that mean that it will affect AirAsia business badly? For now, yes but it’s a sustainable business to own for long term.

2. Is Tony & Kamarudin Guilty Yet?
They are definitely innocent until proven guilty. Until the investigation is concluded, they are still innocent.

Eat Popcorn For AirAsia

3. Price To Book Ratio Is Still Good
Based on my checking, their current Net Tangible Assets (NTA) is at RM1.38 which is still below their current price. I use NTA a lot as one of the main factors for buying stocks.

4. Invest When There’s Blood On The Streets 
This is one of my favorite quote from Baron Rothschild. Many investors used this strategy such as Warren Buffett & Sir John Templeton where they invest in stocks during the Bear Market situation. Of course there are risks to it as we may not know how long the market or stocks will be down.

Conclusion :

At times like this, prices of flights might drop if you are not afraid to fly. As I am writing this conclusion, I can see many people surrounding me are actually wearing face masks walking around the airport. It is good for prevention but is the current situation that bad? As for stock investment, do you all agree that the stock prices are highly affected by human emotion? Based on what I have observed in this particular AirAsia case, it is definitely affected by human emotion.

Bane AirAsia Flight


Dont Miss A Thing



Leave a Reply