Home Travel How The Stock Market Is Playing Travel Recovery (Or Non-Recovery)

How The Stock Market Is Playing Travel Recovery (Or Non-Recovery)

by joeheg

When it comes to the stock market, it often bets on what will happen instead of what is happening right now. Far more is made about “future profits” than current earnings.

That’s why companies earning calls, when they give a forecast of future earnings, can move the stock price much more than the report of how much the company earned in the past quarter.

That’s why I find it interesting how the stock market treats the companies in the travel space.

In October 2020, I wrote about how XpresSpa (XSPA) was trying to become a major player in the airport COVID testing space. If many passengers would need to show a negative test before travel, what better place to get tested than at the airport?

While that wasn’t the best bet, I’ve done OK with my investment last November.

The stock’s recent rebound in price is due to increased revenue from its testing sites. It helps that I seemed to buy at the first of two bottoms of the stock price and any money I make from here is a bonus.

In March 2021, when it looked like travel was starting to recover and people were starting to book vacations again, I bought two travel ETF’s. The first was in AWAY, which owns stocks in travel-related companies. Here are the top 10 holdings.

Holding stocks like Booking.com, Airbnb, Uber, Lyft, Expedia, and Trip.com will give good exposure to the travel market. Let us say that the returns have not been great.

The other ETF I purchased was JETS. It is an EFT focused on US airlines. Its top holdings are evenly divided between Southwest, Delta, American and United and smaller stakes in Allegiant, Alaska, Air Canada, SkyWest, Sun Country, and JetBlue.

As the US airline stocks go, so does this ETF and things haven’t been going well since early 2021.

Did the stock market sense that the travel market was going to start to slow down before the rest of us? Possibly? One of the words I hear most often on CNBC is sentiment. When consumer sentiment is improving, stocks tend to rise. Does that also mean that while many of us have to cancel plans and put off travel into 2021, these stocks are set to make a rebound when sentiment improves and travel starts to recover?

We’ve already seen that people are ready and willing to travel when they think it’s safe. Maybe we need to look to the stock market to see when that’s going to happen.

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This post first appeared on Your Mileage May Vary

Cover Photo by energepic.com from Pexels

1 comment

Brutus September 2, 2021 - 3:32 pm

It’s probably not a great time to buy airline stocks when Warren Buffett is selling them.

Reply

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