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Webjet Share Price Down as NSW Cluster Grows (ASX:WEB)

By Dr. Lachlann Tierney, Friday, 18 December 2020

At the time of writing, the share price of Webjet Ltd [ASX:WEB] is down more than 3%, trading at $4.91. As you can see, the WEB share price had managed a muted recovery rally as Victoria emerged from lockdown...

At the time of writing, the share price of Webjet Ltd [ASX:WEB] is down more than 3%, trading at $4.91.

As you can see, the WEB share price had managed a muted recovery rally as Victoria emerged from lockdown and vaccine rollouts started to take shape:

Source: TradingView

Let’s look at why the WEB share price was lower today and its prospects for a sustained recovery.

WEB share price hurt by new case numbers

There are now 28 cases from the Northern Beaches cluster in Sydney, and images emerged showing a packed Sydney Airport as people scramble to get out of the city before Christmas.

Naturally, the WEB share price was hurt by this latest development.

Back in October, the company gave some insight into how its business will move forward in this difficult trading environment.

You can see its liquidity position below:

Source: Webjet

The company presentation, from October, outlined how WEB has ‘adequate cash reserves for at least two years of difficult trading, as well as an extended senior debt maturity.’

Outlook for WEB share price

Webjet did what it had to do in order to survive with its recapitalisation.

That being said, the prospect of new travel restrictions could dent what little domestic air travel we have.

Even beyond this, a lot hinges on travel arrangements between countries, even after a vaccine is rolled out.

Will countries trust each other enough to let their respective citizens travel beyond domestic borders?

As such, Webjet may continue to see its share price trade sideways for a protracted time as the vaccines are rolled out.

If you have immense patience, though, and can wait a few years, Webjet would probably fall into the ‘world back to normal’ stock category.

More bad news could change this, however, which is why you should be particularly cognisant of risk with regard to your trades and investments.

Discover a unique technical analysis strategy from our chart guru, Murray Dawes, in this report. If you’ve ever wondered what information can be gleaned from a deep dive into a chart, this report is a must-read.

Regards,

Lachlann Tierney,

For Money Morning

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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Dr. Lachlann Tierney

Dr. Lachlann ‘Lachy’ Tierney is passionate about uncovering hidden opportunities in the microcap sector. With four years of experience as a senior equities analyst at one of Australia’s leading microcap firms, he has built a reputation for rigorous research, deep-dive due diligence, and accessible investor communications. Over this time, he has vetted seed, pre-IPO and ASX-listed companies across sectors, conducted onsite visits, and built strong relationships across the microcap space. Lachy holds a PhD in economics from RMIT University, where his research focused on blockchain governance and voting systems. His work was housed within the Blockchain Innovation Hub at RMIT, a leading research centre for crypto-economics and blockchain research. He also holds a Master of Science degree from the London School of Economics and an B.A. (Hons.) in Philosophy and Politics from the University of Melbourne. Born in New York and raised in California, Lachy grew up a few blocks from biotech giant Amgen and counts among his peers various characters in the overlapping worlds of venture capital, technology and crypto. When he’s not researching microcaps, he’s most likely sweating it out in a sauna or dunking himself in cold Tasmanian water.

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.