At the close of trading today, United’s stock traded at $79.67 per share. That’s the same United Airlines whose stock dropped after social media buzzed about a passenger getting dragged off a plane. Remember that story?
Remember that story? Remember the tweets and Facebook posts about how upsetting it was that a passenger could be bumped from a flight, then roughed up to boot? Remember the days of self-inflicted bad PR? United became a cautionary tale for a few days. Yet, if you bought 1,000 shares of United on April 18 and sold them today, you’d be almost $12,000 richer.
British Petroleum had a much more dire disaster on their hands when the Deepwater Horizon oil rig blew in April 2010. The day of the disaster, April 20, BP traded at $60.48 per share. By June 25, 2010, share prices had plummeted to $27.02. Yikes. Yet if you bought 1,000 shares at that nadir then sold the day before Thanksgiving at $41.47, you’d have an extra $14,000 in your pocket for Black Friday (less whatever you paid to get a really nice beat-down rod to help with the crowd at Wal-Mart). While BP has never hit the pre-spill peaks, they stock has stayed relatively solid since.
For these companies, you have to wonder how much internal panic there was when each respective problem hit. In each case, a few news cycles getting raked over the coals meant short term stock drops. It’s hard to be patient and ride out the storm in those cases. Yet in each case, the stock rebounded. People kept pumping gas at BP stations. When United’s flights came up as the cheapest alternatives for a given route, people still bought tickets.
Social media vitriol might seem like it burns with white hot fire. But fires eventually burn out. That’s worth keeping in mind the next time some outrage du jour clogs up news feeds.
Jim Eltringham 