The IAG share price crashes 30% in 6 months! Should I buy?

The IAG share price has crashed by 30% since its 2021 peak in mid-March. After such a steep fall, would I buy this volatile airline stock today?

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This year started delightfully for International Consolidated Airlines Group (LSE: IAG) as its shares took off like a supersonic jet. Alas, over the past six months, the IAG share price has coming crashing back down to earth.

The IAG share price roller coaster

At the end of 2019 and before the coronavirus pandemic, the IAG share price was flying high, closing out the year at 625p. By 17 January 2020, it had lifted even higher to hit 2020’s intra-day high of 684p. Then came the most brutal price crashes for airline shareholders since the dark days of 9/11 (11 September 2001). As the Covid-19 crisis went global in early 2020, IAG shares went into a tailspin.

As air travel was grounded and passenger air miles collapsed, the IAG share price crashed to close at just 159.25p on 14 May 2020. That’s a crushing fall of more than £5 per share in just four months. But the Anglo-Spanish airline operator’s shares had even further to fall. Shares in the owner of British Airways, Spanish airline Iberia, and Irish carrier Aer Lingus hit a lifetime low of 86.54p on 25 September 2020. But then came ‘Vaccine Monday’ (9 November 2020), with news of highly effective Covid-19 vaccines. Hence, the IAG share price has skyrocketed since last Halloween.

At its 52-week high, the IAG share price hit an intra-day peak of 222.1p on 16 March 2021. Alas, it has been pretty much all downhill for this airline stock over the past six months. As I write, the price hovers around 155.25p, down almost 67p from its 2021 high. That’s a collapse of over three-tenths (30.1%) from the mid-March peak in under six months. Yikes.

[fool_stock_chart ticker=LSE:IAG]

For me, this stock is a binary bet

Back on 9 June, I said that I’d need to see clear signs of recovery before this stock joined my buy list. At that time, the IAG share price was 204.5p. Today, they’re almost 50p cheaper. That’s a pretty significant fall in under 90 days. I don’t own this UK share at present, but recent price drops have now brought it onto on my radar.

The big question is: would I be interested in buying with the IAG share price reduced to 155.25p? My honest answer would be: yes, probably. Today, I see airline stocks as binary bets on the success of the global fight against Covid-19. When we appear to be ‘winning’ this battle, airline shares tend to rise on optimism. But if we face more lockdowns or other restrictions, then airlines certainly wouldn’t be my first choice of shares to buy today. Likewise, if the current global economic rebound weakens or goes into reverse, then I wouldn’t be keen to own IAG.

At the current share price, the group is valued at £7.7bn today. Would I be willing to pay this price tag to buy the UK flag carrier outright? I think I would, hence I’d be a cautious buyer of IAG at today’s discounted price tag. But I definitely expect a bumpy ride on the long route to recovery!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

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