What Happened?
Shares of aircraft leasing company FTAI Aviation (NASDAQ:FTAI) jumped 8.4% in the afternoon session after BTIG analyst Andre Madrid showed strong confidence in the business quality and the stock, saying "Despite the market reaction, we remain positive on the company's disruptive aftermarket approach and ability to drive further profitability at the Aerospace Products business."
Madrid has a Buy rating with a $190 price target, indicating that he believes shares can more than double in the coming year. Thus far, multiple sell-side firms such as Morgan Stanley have defended the company following the Muddy Waters short report.
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What The Market Is Telling Us
FTAI Aviation’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was a day ago when the stock dropped 28.3% on the news that the company released additional information following Muddy Waters's short report (published last week). FTAI said in an SEC filing that it "strongly disagrees with the assertions made in the Short-Seller Report. However, in view of the timing of the Short-Seller Report relative to the preparation of the Company's audited financial statements for fiscal year 2024, and the potential time required for any review of this nature, the Company cannot rule out the possibility that the filing of Company's Annual Report on Form 10-K for fiscal year 2024 (the "Annual Report") may be delayed."
This was not the response that investors and the market were hoping for. A delayed filing raises concerns that there could be some credence in Muddy Waters's claims that FTAI has engaged in misleading accounting practices to make its businesses look better. Specifically, Muddy Waters claims that the company is overstating the portion of its business that comes from MRO (maintenance, repair, overhaul), which is steady and high margin. Instead, claims the short seller, there are more engine sales, which tend to be non-recurring and more cyclical in nature.
FTAI Aviation is down 36.6% since the beginning of the year, and at $91.55 per share, it is trading 47.7% below its 52-week high of $174.96 from November 2024. Investors who bought $1,000 worth of FTAI Aviation’s shares 5 years ago would now be looking at an investment worth $4,783.
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