Spotlight: Flight Centre is now the most-shorted stock on the ASX

by

Jack Derwin

July 15th 2022 3 minute read

The story behind Flight Centre is well known. It starts with a double-decker bus in Europe, evolves into Top Deck, and ends up as a multi-billion travel company operating out of 23 companies. As pandemic restrictions unwind, things are broadly looking up for travel but not all investors are buying the travel recovery story. These are the five big stories from the week that was.

1. Turbulence ahead

This week U.S. airlines and cruise companies soared as American Airlines forecast roaring demand would surpass 2019 levels.

While costs are rising, especially oil, rival Delta managed to post a profit, crediting the fact that people are desperate to fly.

There is less confidence elsewhere. Heathrow has capped daily arrivals to 100,000 with Emirates Airline declaring the move “unacceptable” and refusing to comply.

In Australia meanwhile new figures showing Flight Centre ranks as the most-shorted stock on the ASX. There are a few theories about how Flight Centre became a battleground stock. At any rate, its share price fell 7% this week.

2. Bye now

Zip has broken off merger talks with Sezzle, ditching the deal as the under-pressure buy now, pay later sector nears regulation.

Then something interesting happened. Zip shares jumped 10% on the news of the breakup while Sezzle fell off a cliff.

Meanwhile Afterpay’s founders reportedly trousered $264 million before selling out to Block – today enough to buy Sezzle outright six times over.

Timing is everything.

3. Character limits

Twitter is officially suing Elon Musk, accusing the billionaire of acting in “bad faith” after lobbing a US$44 billion takeover bid only to withdraw it.

Twitter’s lawyers claim he changed his mind when “the market started turning” and tried to get out of the deal under false pretences.

It’s going to get weird because essentially Twitter is arguing Musk must buy it by claiming he’s an ethically flawed businessman. Get the popcorn.

4. Downstream

Netflix is set to launch a budget, ad-supported streaming option later this year as it tries to hang onto as many eyeballs as it can.

The platform expects it lost as many as two million subscribers this quarter, with tiered pricing an effort to stay competitive in a crowded field.

Netflix now needs to renegotiate its deals with Hollywood studios who want to charge 15-30% more for their content if it is to feature ads.

5. Drive on

More than 124,000 documents have been leaked revealing how Uber successfully lobbied governments to conquer the world.

The whistleblower behind the data dump has detailed how he was part of Uber’s strategy to water down labour laws and crush the taxi industry.

While it isn’t surprising (Uber’s share price barely budged) it is enlightening to see how the sausage was made – as well as the texts.

 

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