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Why Webjet Limited’s share price is crashing today

Webjet Limited (ASX: WEB) has seen its share price sink more than 10% today, falling 11.25% to $9.66.

webjet-share-price-nov-2016

Source: Yahoo Finance

Travel agents Helloworld Ltd (ASX: HLO) and Corporate Travel Management Ltd (ASX: CTD) have also been hit, losing 8% to $4.05 and 2.5% to $18.45 respectively. Flight Centre Travel Group Ltd (ASX: FLT) is down 1.2% to $33.31 – which is the same as the broader market, suggesting it is not impacted as much – or at all – by the factors sinking Webjet’s share price.

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down 1.2% in late trading, having recovered somewhat during the afternoon session.

The fall in Webjet’s share price may be to do with weaker domestic travel demand. Both Qantas Airways Limited (ASX: QAN) and Virgin Australia Holdings Ltd (ASX: VAH) have warned this week that they are seeing subdued trading conditions. Their shares were down 1.5% and 2.1% respectively.

On Monday, Qantas said domestic traffic and unit revenue in July and August were weak, while September had reverted to more normal conditions – outside resources routes.

And yesterday, Virgin reported an underlying loss before tax of $3.6 million for the September quarter, “impacted by subdued trading conditions during the quarter, particularly in the domestic market, which affected revenue.

That could mean that Helloworld, which services mainly Australia and Corporate Travel, which generates 37% of earnings from Australasia could be impacted by lower demand. Flight Centre derives around 50% of its total transaction value (TTV) outside Australia, so may not be affected as much as the other smaller companies.

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Motley Fool contributor Mike King owns shares of Flight Centre Travel Group Limited. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia owns shares of Corporate Travel Management 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 Bruce Jackson.

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