Why Frontier Group Stock Just Crashed

Frontier Group Holdings (NASDAQ: ULCC) stock tumbled 10.9% through 10::10 a.m. ET Tuesday after announcing a change in leadership. Effective immediately, CEO Barry L. Biffle will no longer be CEO (although he'll remain with the company "in an advisory capacity" through the end of the year).

Company president James G. Dempsey will take over as interim CEO in his stead.

Image source: Frontier Airlines.

Details, please

No explanation was given for the CEO switcheroo, not even the standard "he wants to spend more time with his family" or "pursue other endeavors." Board of directors chair Bill Franke said he's "deeply appreciative of Barry [Biffle]'s leadership and dedicated service to Frontier over the past 11 years." At the same time, "we believe Jimmy [Dempsey] is uniquely qualified to guide our airline into the future."

For his part, as he takes over the airline, Dempsey says: "Frontier is well-positioned to deliver unrivaled value to customers across the United States."

Is Frontier stock a sell?

Good news for investors: Bad news on the numbers front doesn't seem to be the issue. Frontier specifically reiterated its previous guidance for Q4 2025, referring investors back to its Nov. 5 earnings report.

Therein, Frontier had guided investors to expect non-GAAP earnings between $0.04 and $0.20 per share on "roughly flat" capacity growth. That still sounds like an improvement over the company's $0.34 per share loss (both GAAP and non-GAAP) in Q3.

Revenue was down about 5% last quarter, too, so if capacity leveling off to "roughly flat" implies a similar move in revenue, then this, too, would be good news for the airline. All this being said, Frontier stock is currently unprofitable and priced north of 21 times forward earnings.

I'm not convinced "roughly flat" is good enough to justify that price.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.