Slammed: Why the Flight Centre Travel Group Ltd share price has fallen 16%

It’s been a disastrous couple of days for shareholders of Flight Centre Travel Group Ltd (ASX: FLT). The shares have been absolutely crushed, falling 8.9% on Monday and another 7.7% today for a total loss of 16%.

The shares have now fallen below $31 after trading as high as $45.37 in March.

Source: Yahoo Finance

Source: Yahoo Finance

A profit downgrade from the travel agent business on Monday afternoon was the catalyst for the heavy fall endured by the shares over the last 24 hours or so.

In an update to investors, the company said:

Full year underlying PBT (profit before tax) may finish about 2%-5% down on the $366.3 million PBT recorded during 2014/15. While the likely result will be FLT’s third best ever, it will be outside initial guidance of 4%-8% underlying PBT increase during 2015/16.”

As such, it’s a pretty substantial downgrade on the group’s behalf. You can read more about the update, here.

While the company provided a number of reasons for the downgrade, the issues do appear to be temporary in nature. Of course, there is always the widespread concern about Flight Centre’s future, given its brick-and-mortar business model, which may deter some people from investing.

Others, however, could look at the sharp pullback as an opportunity to buy a quality business for the long-term.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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