Why has March been such a lousy month for the Webjet (ASX:WEB) share price?

It’s been a tough month for Webjet shares…

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Key points

  • Webjet shares edge slightly higher this month despite the ASX 200 zooming ahead 
  • Geopolitical tensions and commodity prices have weighed down on the company's share price 
  • Webjet will release its FY22 results in late May 

The Webjet Limited (ASX: WEB) share price moved in circles for the majority of this month, registering a 1.8% gain.

Investors appear to have mixed feelings when it comes to deciding the value of Webjet shares in the current climate.

At Wednesday’s market close, the online travel agent’s shares finished 1.81% higher to $5.63.

What’s weighing down Webjet shares lately?

A catalyst as to why Webjet shares have failed to take off could be because of the war in Ukraine.

Russian aggression spooked global markets, sending commodities prices soaring. This is particularly in relation to oil, which airlines need to fuel the planes. Most likely this leads to higher ticket prices from airlines, in which Webjet’s profit margins could be squeezed consequently.

In addition, with war raging on Europe’s doorstep, passengers might be less likely to travel to the region.

Webjet operates in 22 countries that include the United Kingdom, Ireland and Europe, the latter of which is the biggest market.

In its first half results, the WebBeds division recorded $158 million in total transaction value (TTV) for Europe. Next on the list was the Asia Pacific region with $110 million, and North America at $93 million.

Webjet reported a cash surplus of $3.5 million per month, a significant turnaround compared to FY21. Severe lockdowns led the company to record an average monthly cash burn of $5.5 million in the previous financial year.

Webjet noted that TTV could reach pre-COVID levels by the second-half of FY23. The group portfolio will be a much leaner business, having trimmed 20% of operating costs.

All eyes will be on Webjet’s FY22 results which will be released sometime in late May.

Webjet share price summary

In the past 12 months, the Webjet share price has lost more than 5%. This is despite hitting a 52-week high of $6.89 as recently as October 2021.

The company’s shares are still a long way off their pre-COVID levels of around the $9 mark.

Based on valuation grounds, Webjet has a market capitalisation of roughly $2.14 billion.

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 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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