American Airlines Stock Slumps as Investors Get a Dose of Reality

American Airlines (NASDAQ: AAL) was a huge beneficiary of the "dash for trash" that began about a month ago. Speculators snapped up American Airlines stock along with other stocks that had been crushed by the COVID-19 pandemic, with no regard for business fundamentals or the companies' recovery prospects.

The surge in speculation has tangibly helped American Airlines: Increased interest in the stock enabled the company to bolster its balance sheet with an equity and convertible debt offering this week. That said, sentiment alone can't fix what's wrong with the full-service airline right now. Investors are starting to realize just how challenging a turnaround will be, causing the bubble in American Airlines stock to deflate.