Why the Webjet (ASX:WEB) share price is up 48% in November

The Webjet share price is gaining again today, adding to last week's 18% rise, and bringing the gains to 48% so far in in November.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published November 17, 2020 3:57 pm AEDT

The Webjet Limited (ASX: WEB) share price is continuing to march higher today, up 2.0% in afternoon trading. Today's gains follow on the 18% rise posted last week, which sees the Webjet share price up 48% so far in November.

By comparison the S&P/ASX 200 Index (ASX: XJO) is up 9.7% so far this month.

However, while the ASX 200 is now only down 2.9% year to date, the Webjet share price is still 45.6% lower, despite November's meteoric rise. That's because the company is still battling back from seeing its shares lose more than 77% in the early months of the COVID-19 breakout.

stock growth chart — Image source: Getty Images

What does Webjet do?

Headquartered in Melbourne, Webjet is a digital focused travel agency operating in Australia and New Zealand, with customers across the global consumer and wholesale markets.

Webjet's business consists of a B2C division comprising the Webjet, Online Republic and WebBeds brands, and a B2B division comprising the Lots of Hotels, Sunhotels and FIT Ruums brands. The company's operations are primarily online/technology-based.

Webjet shares first listed on the ASX in 1997.

Why is the Webjet share price rallying?

The Webjet share price is taking off for much the same reason it tanked earlier this year. Or the opposite reason, to be more precise.

When the pandemic swept across the globe, domestic and international travel came to a virtual standstill. Travel related shares like Webjet, Qantas Airways Limited (ASX: QAN) and Flight Centre Travel Group Ltd (ASX: FLT) took some of the biggest losses.

Travel shares have also been some of the laggards during the wider market rebound. Many investors have remained on the sidelines, wary that the unknown new virus could thwart humanity's best efforts at developing a vaccine and indefinitely stall the return of international travel.

Those fears were partly put to rest last week when Pfizer Inc. (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX) announced that their vaccine has proven 90% effective at preventing symptomatic coronavirus infections.

Investor anxiety over the travel sector was further eased overnight, after Moderna Inc (NASDAQ: MRNA) reported its vaccine could top those results, proving to be 94.5% effective in late-stage trials.

With investors now hopeful that domestic and global travel will reopen much faster than anticipated, the Webjet share price has been one to benefit.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.