10 Worst Airline Stocks To Buy According to Short Sellers

7. Frontier Group Holdings, Inc. (NASDAQ:ULCC)

Short Interest as % of Shares Outstanding: 6.54%

Number of Hedge Fund Holders: 16

Frontier Group Holdings, Inc. (NASDAQ:ULCC) is an American ultra-low-cost carrier headquartered in Colorado. It operates flights to over 120 destinations in the U.S., Caribbean, Mexico, and Central America. It is a subsidiary of Indigo Partners, LLC, which is a private equity firm that focuses on transforming airlines into low-cost carriers.

Frontier Group (NASDAQ:ULCC) mostly caters to price-sensitive travelers, as it offers low-cost air travel across North America while maintaining a strategic focus on underserved airports and secondary markets. Its business model relies on low fares, ancillary fees for optional services, and a streamlined operation that maximizes efficiency.

Analysts are showing mixed views on the company’s stock. On September 16, TD Cowen increased Frontier Group’s (NASDAQ:ULCC) price target from $3 to $4 with a Hold rating, as reported by The Fly. The update came after the company increased its financial outlook for the third quarter of 2024. According to the firm, the airline’s leaders sounded confident and excited about the future, especially looking ahead to 2025.

On the same day, Citi analyst Stephen Trent increased the company’s price target from $3.50 to $4.70 but maintained a Neutral rating. The firm noted that the airline is showing progress in improving its revenue mix and stabilizing earnings. However, despite potential short-term stock support from U.S. interest rate cuts, the airline’s high financial leverage and cash burn do not align well with its earnings improvements. Additionally, its shares remain highly volatile, even compared to other U.S. airlines.

In Q2, 16 hedge funds had investments in Frontier Group (NASDAQ:ULCC), with positions worth $214.551 million. Wildcat Capital Management is the most dominant shareholder in the company as of Q2 and has a stake worth $138.342 million.