How does the Webjet (ASX:WEB) share price perform during lockdowns?

How have the company’s shares been trending when lockdowns occur?

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The Webjet Limited (ASX: WEB) share price has been hit hard during COVID-19 as the federal and state governments enforced travel restrictions. Although almost 60% higher than this time last year, the online travel agent’s shares have more than halved in value since January 2020.

At Tuesday’s market close, Webjet shares finished the day flat at $5.10.

How Webjet shares react to lockdowns

When COVID-19 arrived on the world stage, investors feared the travel industry would be the first to feel the impact. And they were right. Webjet saw international and domestic bookings cancelled, along with its WebBeds business becoming almost non-existent.

As a result, Webjet shares fell from the $14 mark at the beginning of 2020 to a lowly $2.25 in late April 2020. For the first time in history, the Australian international border, as well as state borders, closed.

Webjet had been forced to go into hibernation mode in a move to reduce costs and save the business. Its shares have been volatile, picking up when state governments ease border restrictions but plummeting when parts of the country re-enter lockdowns.

This was evident when Victoria went into a hard lockdown from March 2020 to June 2020. Webjet shares had started to rise to around $4.50 when the state declaring it was beating the virus and relaxed restrictions.

However, this was short-lived. Just 2 weeks later, Victoria again went back to stage 4 restrictions, with Webjet shares tumbling to under $3 again.

What about the current COVID-19 lockdown?

Fast-forward to today, the Webjet share price is hovering around $5 as the near-term future remains uncertain. Vaccination rates are increasing by the tens of thousands per week, but parts of Australia remain in lockdown. This includes Victoria, North Queensland and many parts of New South Wales.

The latter may not open in time for the busy Christmas holiday season, recording 356 new cases yesterday. If this happens, it would have a detrimental effect on Webjet shares.

Webjet share price snapshot

Over the last 12 months, Webjet shares have accelerated almost 60% since hitting near COVID-19 lows.

Currently, the company’s share price is sitting just above the middle of its 52-week range of $2.63 to $6.33.

Based on its current valuation, Webjet has a market capitalisation of around $1.93 billion with approximately 379 million shares outstanding.

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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 owns shares of and has recommended 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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