If you’ve been watching the price of LUV stock lately, you know it feels a lot like sitting on a tarmac during a ground delay. Frustrating. Predictable, yet somehow still surprising when things actually start moving. For years, Southwest Airlines was the "safe" bet in the sky—the airline that didn't charge for bags, didn't do assigned seating, and didn't really care what Wall Street thought of its "old school" ways.
But things have changed. Drastically.
As of mid-January 2026, we’re seeing Southwest (LUV) trading around the **$43.00** mark. That’s a massive jump from the mid-$20s we saw throughout much of early 2025. Honestly, if you’d told a shareholder two years ago that Southwest would be ditching its iconic open-seating policy and launching airport lounges, they probably would’ve checked your temperature. Yet, here we are. The "LUV" is back, but it looks a lot different than it used to.
What is Driving the Price of LUV Stock Right Now?
It’s impossible to talk about the current price of LUV stock without mentioning the elephant in the room: Elliott Investment Management. This activist investor group basically spent the last year and a half kicking the door down at Southwest’s Dallas headquarters. They wanted blood, they wanted board seats, and most importantly, they wanted a business model that actually made money in a post-pandemic world.
They mostly got what they wanted.
Southwest is currently in the middle of what CEO Bob Jordan calls the "most significant transformation" in the company’s history. We aren't just talking about a new coat of paint on the planes. We’re talking about:
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- Assigned Seating: This started rolling out in late 2025 and is fully operational as of this month (January 2026).
- Premium Cabin Options: Extra legroom seats are finally a thing on Southwest. They realized people are actually willing to pay $50 more not to have their knees in their chin.
- Red-eye Flights: Something Southwest avoided for decades is now a core part of their schedule to increase aircraft utilization.
The market has responded. When Barclays upgraded the stock to Overweight with a price target of $56.00 back in December 2025, it signaled that the big money finally believes the "new" Southwest can compete with Delta and United for those high-paying business travelers.
The Numbers You Actually Care About
Let's look at the raw data because vibes don't pay dividends. Southwest's market cap is hovering around $22.85 billion. Their 52-week range has been a wild ride, swinging from a low of $23.82 to a recent high of $45.02.
| Metric | Current Estimate (Jan 2026) |
|---|---|
| Last Price | ~$43.12 |
| Price/Earnings (P/E) | ~66.6 |
| Dividend Yield | 1.67% |
| 2026 EPS Forecast | ~$4.50 |
That P/E ratio looks scary high, right? Usually, a P/E of 66 would mean a stock is insanely overpriced. But in this case, it’s because earnings were depressed during the transition. Analysts like those at TD Cowen and JP Morgan are looking ahead to 2026 and 2027. They expect earnings per share (EPS) to rocket toward $4.50 or even $6.00 as these new revenue streams (like bag fees and premium seats) start hitting the bottom line.
Why Most People Get the Southwest Bull Case Wrong
Kinda funny—most retail investors think the price of LUV stock is all about fuel costs or pilot strikes. Sure, those matter. But the real story in 2026 is ancillary revenue.
For years, Southwest left billions on the table. By not charging for bags, they were the "good guys," but they were also the guys with the shrinking margins. While they still offer two free bags—a core part of the brand they refuse to kill—they’ve started finding other ways to squeeze value. The new Basic Economy structure they launched in mid-2025 has been a huge win. It basically forces travelers who want flexibility to pay up, while still offering a low "headline" price to compete with Spirit or Frontier.
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It’s a balancing act. If they lean too far into being a "legacy" carrier, they lose their soul. If they stay too "low-cost," they go broke.
The "Elliott" Effect and Leadership Shakes
It hasn't been all sunshine and rainbows. We saw a lot of "involuntary redundancies" (layoffs) in 2025—about 15% of the corporate workforce was cut. Chief Transformation Officer Ryan Green is set to leave this April. These are the growing pains of a company that is being forced to grow up by a firm that owns 13% of its stock.
Elliott recently trimmed its stake from 16% down to 13.1%. Some people took that as a bad sign, but honestly? It’s more likely they’re just taking profits after the stock surged 30% in the last quarter of 2025. They still have a massive seat at the table until the 2026 annual meeting.
Is the Price of LUV Stock a Buy, Hold, or "Run Away"?
If you ask 16 different Wall Street analysts, 10 will tell you to Hold.
Why? Because execution risk is real. Switching an entire airline from open seating to assigned seating is a logistical nightmare. It’s like trying to change the tires on a car while it’s doing 80 mph on the highway. If the tech glitches—which Southwest is famous for (remember the 2022 Christmas meltdown?)—the stock will crater.
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However, the Bulls (the optimists) point to the partnership with German carrier Condor that just launched on January 19, 2026. This gives Southwest passengers a way to book transatlantic flights. It’s a tiny step toward international relevance that doesn't involve buying expensive wide-body jets.
What to Watch For in the Next 90 Days
If you're holding LUV or thinking about jumping in, keep your eyes on these specific triggers:
- Q1 2026 Earnings Call: This will be the first real look at how much money those premium seats are actually making.
- Load Factors: Are people still flying Southwest now that the "quirkiness" of open seating is gone? Or did they just go to Delta?
- The $38.83 Pivot: Some analysts, like those at Fintel, have a median price target lower than the current price. This suggests we might see a "pullback" or a correction soon if the hype outpaces the reality.
Actionable Insights for Investors
Honestly, the price of LUV stock is no longer for the faint of heart. It’s gone from a "widows and orphans" stock to a "turnaround play."
- Check the Technicals: The stock recently hit a 52-week high of $45.02. If it breaks through $46 with high volume, it could run to $50. If it fails to hold $40, it might head back to the mid-$30s.
- Monitor Sentiment: Watch for news about the new airport lounges. If they’re a hit with business travelers, Southwest’s "revenue per available seat mile" (RASM) will climb.
- Diversify: Don't bet the house on one airline. The industry is still facing Boeing delivery delays and labor shortages.
Southwest is trying to become a "premium low-cost" carrier. It’s a weird niche, and it’s one that will define the stock’s performance for the rest of the decade. You've got to decide if you believe in the "New Southwest" or if you're just nostalgic for the old one.
Next Step for You: Review the latest 10-K filing from Southwest to see their specific debt-to-equity ratio following the 2025 share repurchases. This will tell you how much "cushion" they actually have if the economy slows down in late 2026.