The Webjet Limited (ASX: WEB) share price gained 4.2% today. That’s enough to deliver shareholders over a 31% gain so far in August.
Webjet’s share price has now rebounded 64% from this year’s April 23 low. But that rebound has a long way to go before the company recovers from the massive hit it took as COVID-19 saw domestic and international travel grind to a virtual halt.
Despite the recent strong performance, year-to-date Webjet’s share price is still down 61%.
Webjet is an S&P/ASX 200 (INDEXASX: XJO) listed company. By comparison the ASX 200 is down 8% since January 2.
What does Webjet do?
Headquartered in Melbourne, Webjet is a digital focused travel agency operating in Australia and New Zealand, with customers across global consumer and wholesale markets.
Webjet’s business consists of a B2C division comprising the Webjet, Online Republic brands and WebBeds, and a B2B division comprising the Lots of Hotels and Sunhotels brands and FIT Ruums. The company’s operations are primarily online/technology-based.
Webjet shares first listed on the ASX in 1997.
What’s behind Webjet’s 31% share price leap in August?
Webjet’s 31% share price gains in August so far are even more remarkable when you take into account the company’s 11% loss last Thursday.
That loss followed on from the release of Webjet’s FY20 results, reporting a $143.6 million full-year loss.
Since Thursday’s close Webjet’s share price has rebounded 15%. That — and today’s 4.2% share price gains — will come as sour news to the legion of investors betting against the company.
Yesterday, Webjet led the pack of most shorted shares on the ASX with a short interest of 13.1%. That tells me that some short covering — when investors buy back shares they’ve sold short to escape increasing losses when share prices move higher — is likely responsible for some of today’s gains.
As for Webjet’s 31% share price gain since the beginning of August, this follows the trend of investors looking beyond the viral global shutdowns and towards the reopening of national and international travel. A trend that’s also seen big share price gains in August for companies like Qantas Airways Limited (ASX: QAN) and Flight Centre Travel Group Ltd (ASX: FLT).
When borders do fully reopen, it’s the well-managed but still beaten down stocks in the travel and leisure industries that could offer some of the biggest share price gains.
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More reading
- Are Webjet and other ASX travel shares taking off?
- These are the 10 most shorted shares on the ASX
- ASX 200 down 0.8%, IDP Education soars
- Webjet share price crashes 12% lower: Is it time to buy?
- Top brokers name 3 ASX shares to sell today
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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