Why are Webjet shares still among the most shorted on the ASX

The company’s shares have been heavily shorted this month.

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Key points

  • Webjet shares nudge 1.55% higher to $5.90 during early afternoon trade 
  • Investors are continuing to short the company's shares following a sluggish recovery of the travel market 
  • A couple of brokers recently weighed in on the Webjet share price with a mixed rating 

The Webjet Limited (ASX: WEB) share price has continued to move in circles since the start of 2022.

This follows the company’s relatively quiet period with its last price-sensitive announcement reporting its half year results.

While the online travel agent’s company’s shares have risen 14% year to date, it’s still down from November 2021 levels.

At the time of writing, Webjet shares are up 1.55% to $5.90.

Webjet shares in top 10 open ASX short positions

The negative investor sentiment on the Webjet share price can be attributed to the sluggish recovery of the travel market. This has ultimately attracted a large number of short-sellers to the company’s registry.

Short-selling is a common trading strategy that aims to profit from the fall in the price of a security. The goal is for an investor to borrow shares and sell the shares, and then buy them back at a lower price for a profit.

On 11 April, the Australian Securities & Investments Commission (ASIC) released its short position report revealing the level of short interest within companies.

As such, Webjet remained in the top 10 list with 10.54% of its shares being heavily shorted by investors.

In comparison, the government body had a short interest of 7.87% in Webjet at the start of the calendar year.

Given the large increase in short positions being taken up, it appears investors believe the company’s performance could be underwhelming.

Webjet is scheduled to release its FY22 full year results within the next five weeks.

What do the brokers think?

A couple of brokers have rated the company’s share price with varying price points over the last week.

The team at Citi raised its view on the company’s outlook to “buy” from “neutral” on Webjet shares. It also lifted its 12-month price target by 0.6% to $6.50. This implies a potential upside of 10% for investors.

On the other hand, analysts at Macquarie put out a more bearish tone, slashing its rating by 4.9% to $5.80. It seems the broker considers that the company’s shares are overvalued for the time being. Based on the current Webjet share price, this implies a downside of around 2%.

Webjet share price summary

Over the past 12 months, the Webjet share price has risen by about 14%.

In comparison, the Flight Centre Travel Group Ltd (ASX: FLT) share price has gained 22% across the same time frame.

Webjet presides a market capitalisation of about $2.24 billion and has approximately 380.51 million shares outstanding.

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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