The Corporate Travel Management Ltd (ASX: CTD) share price lost altitude during June 2022. It fell by more than 16% last month.
This was noticeably worse than the S&P/ASX 200 Index (ASX: XJO) which 'only' fell by around 9%. That's still a very large drop over one month.
The ASX travel share wasn't the only one to suffer in June though. The Flight Centre Travel Group Ltd (ASX: FLT) share price also fell by 15%, while the Webjet Limited (ASX: WEB) share price dropped more than 10%.
Corporate Travel didn't actually announce anything that was deemed to be 'market sensitive' to investors during June 2022.
In fact, the last investors heard from Corporate Travel was in early May. I'll recap that update in a moment but, first, let's look at what else happened in June.
Interest rate rises
Central banks are highly motivated to get on top of the inflation situation.
Inflation has spiked in Australia, the US, the UK, and many other economies. Central banks have a key tool to try to reduce demand in the economy – increase interest rates. While this may bring inflation under control eventually, there's also the issue of what it does to asset valuations.
The RBA increased the interest rate by 50 basis points in June. Today, it also raised the interest rate by another 50 basis points at its July meeting.
Why do interest rates matter? Well, as Billionaire Ray Dalio once said:
It all comes down to interest rates. As an investor, all you're doing is putting up a lump sum payment for a future cash flow.
Higher interest rates, in theory, lower asset valuations.
Improved outlook
While the Corporate Travel Management share price has been suffering, its trading conditions have actually been improving.
Looking at the company's business update from May 2022, Corporate Travel said it expects to be at least 75% larger than it was in the 2019 calendar year at full recovery. Monthly revenue is expected to beat 2019 levels in the FY22 fourth quarter. It also said that acquisitions made during COVID-19 have been "transformative".
The business said that it's recovering faster than the corporate travel sector in its largest regions, with "strong market share gains" in all regions.
Management believes that FY22 fourth-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) will provide "strong momentum" going into FY23.
The company boasted that it has zero debt and sufficient cash to support a full recovery, putting it in a "strong" financial position. It also said it continues to invest in its technology and staff.
Corporate Travel Management share price snapshot
Since the beginning of 2022, Corporate Travel shares have fallen by around 13%.
