The Flight Centre Travel Group Ltd (ASX: FLT) share price has continued to move in circles since the start of 2022. This is despite the company reporting relatively positive numbers in its FY22 half year results on 24 February.
While the travel agent’s company’s shares have risen 3% in the last month, it hasn’t been so great of late.
In fact, Flight Centre shares have now recorded three consecutive trading days of losses, tumbling by almost 5%.
At the time of writing, its share price is down 0.41% to $19.47 apiece.
Flight Centre shares take top spot in open ASX short positions
The negative investor sentiment on the Flight Centre share price can be attributed to the slow recovery of the travel market. This has ultimately attracted a large number of short sellers to the company’s registry.
Short-selling is a common trading strategy that aims to profit from the fall in the price of a security. The goal is for an investor to borrow and sell the shares, and then buy them back at a lower price for a profit.
Last week, the Australian Securities & Investments Commission (ASIC) released its short position report revealing the level of short interest within companies.
As such, Flight Centre remained in the top spot with 17.89% of its shares being heavily shorted by investors.
In comparison, the government body recorded a short interest of 8.84% in Flight Centre shares last year on 6 April.
Given the large increase in short positions being taken up, it appears investors believe the company’s performance could be underwhelming. This is due to the COVID-19 pandemic’s ongoing impact on the Flight Centre business.
What do the brokers think?
A couple of brokers have rated the company’s share price with varying price points over the last couple of months.
The team at Bell Potter raised its 12-month price target for Flight Centre shares by 2.5% to $20.50 in March.
The broker retained its positive view of the company’s outlook and competitive position as global travel begins to improve.
In addition, Bell Potter highlighted Flight Centre’s growing corporate business and the restructuring of its leisure operations. It believes that the market is underestimating the strength of its corporate business.
On the other hand, analysts at Citi put out a more bearish tone, slashing its rating by 1.4% to $15.77. It seems that Citi considers that the travel agent’s shares are overvalued for the time being. Based on the current Flight Centre share price, this implies a downside of around 19%.
Flight Centre share price snapshot
Over the past 12 months, the Flight Centre share price has risen by about 5%.
In comparison, the Webjet Limited (ASX: WEB) share price has lost around 2% across the same time frame.
It’s worth noting that Flight Centre shares hit a multi-year high of $25.28 in October 2021, before treading lower. This is a huge difference from when its shares were trading at the $13 mark in August 2021.
Flight Centre presides a market capitalisation of about $3.89 billion and has approximately 199.75 million shares outstanding.
The post Why is the Flight Centre share price still the most shorted on the ASX? appeared first on The Motley Fool Australia.
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More reading
- These are the 10 most shorted ASX shares
- What went so wrong for ASX travel shares today?
- The Flight Centre share price is diving 5% today. What’s next in April?
- ASX travel shares have been flying higher over the past month. Here’s why
- Why the Flight Centre share price travelled 12% higher in March
Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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