Webjet Nosedives 6% as Investors Cash In

As at time of writing, Webjet Limited [ASX:WEB] took a steep plunge today after six months of impressive growth.

Things get interesting when comparing its performance in the one-month versus six-month range.

As seen below, Webjet has been strong over the last six months hitting a high of $17.93 on 29 August.

Here is Webjet’s share price over the six-month range:

trading view webjet

Source: tradingview.com

Strong growth is there, especially after the announcement of a 50% increase in revenue last month.

Now look at Webjet over the past month:

trading view webjet

Source: tradingview.com

It’s a completely different story.

A downward trend followed by an (as of yet) unexplained sell off.

Perhaps this is a case of profit-taking.

Sometimes, after a long run of strong results, an otherwise healthy stock takes a plunge as investors cash in.

As the saying goes, ‘buy low, sell high’.

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Should you buy or sell Webjet?

Research by the major insight groups like Thomson Reuters and Morningstar have mixed views.

But the major insight groups have a nasty habit of getting things wrong.

Which is where Money Morning steps in…

What you really need to look at is what barriers to growth Webjet might face in the near to mid future.

For instance, web traffic competition.

Webjet ranks 294th in Australia.

Meanwhile kayak.com.au is slowly catching up with Webjet with a significant rise up the traffic rankings in the last three months.

And expedia.com.au is actually ranked higher than Webjet at 281st.

Both of these websites are overseas competitors owned by massive US-based companies.

So on one hand, Webjet has a strong brand and increasing revenue.

On the other hand, they face greater competition from companies with big money.

Going forward the wise investor should be mindful of competition — not just big headline revenue increases.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Aussie finance expert reveals four Aussie stocks he believes could be top performers in 2018. Get your free report now.


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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