Why Are Travel Stocks Falling?

Why Are Travel Stocks Falling?

Happy Friday folks!

After weeks of a downtrend in the stock market, investors are finally seeing positive gains in many of Wall Street’s favorite stocks again. The broader market reached new records, while tech and blue-chip shares also flirted with new highs, encouraged by employment growth in the U.S and optimism about the strong pace of economic recovery. 

The resurgence in growth stocks was great for investors to see after the beating they have taken recently. Wall Street is also looking ahead to the upcoming batch of first-quarter earnings reports, including financial releases from the likes of JPMorgan Chase & Co and Goldman Sachs, both of whom are set to report next week. 

Here were the biggest movers in the MyWallSt shortlist this week:

Moving Up ⬆️

Square (SQ) +12.6%

Roku Inc. (ROKU) +12.3%

Twitter (TWTR) +11.6%

Pinterest (PINS) +10.6%

Peloton Interactive (PTON) +10.3%

Moving Down ⬇️

ShotSpotter (SSTI) -7.0%

Tripadvisor (TRIP) -6.5%

Trupanion (TRUP) -4.2%

Ctrip (TCOM) -4.0%

Baozun (BZUN) -3.8%

What you need to know 

Square (SQ) +12.6%

Shares of Square jumped this week after investors noticed that the company has been investing significantly in its international operations. The financial services and digital payments company has begun hiring vigorously abroad as it positions itself to expand its operations globally. Shareholders are feeling optimistic that international growth will help boost the company’s earnings outlook for 2021, with S&P Global Market Intelligence reporting that Square currently only gets around 3.3% of its total revenue from outside the U.S.

Roku Inc. (ROKU) +12.3% 

Roku stock soared this week after Evercore ISI analyst, Mark Mahaney, gave a confident outlook on the stock and stated that shares will reach $400 this year. If Mahaney is right, Roku shareholders would get a 9.5% return on their investment based on current prices. Roku is well-positioned to capitalize on being a leading manufacturer of digital media players as marketers and companies switch from traditional TV advertising dollars to streaming services and TV-connected platforms. Investors are also impressed with Roku’s command in ad-supported streaming, audience growth, and the high standard of its products. 

Twitter (TWTR) +11.6%

Twitter got a bump this week when rumors emerged that the social media company was reportedly in discussions to buy audio-chat app Clubhouse for $4 billion. The talks may not have led to a deal, but the news reminded shareholders of Twitter's new determination to monetize and improve its products. After seeing Clubhouse’s popularity, Twitter created Spaces at an impressive speed, having already acquired Revue this year to get into the newsletter business. While it may be too early to see how these products will perform, it’s clear that investors are happy to see that the company is innovating and trying to drive engagement.  

Pinterest (PINS) +10.6%

This week, Pinterest announced that it was launching a ‘Creator Fund’ to pay a small group of influencers to create content for the platform. The fund will provide $500,000 in cash and media to influencers this year, starting with eight creators who come from under-represented backgrounds. While some investors might wonder why Pinterest isn’t focusing on optimizing ads, many recognize that the new fund is a great way to ensure content creators from different backgrounds are attracted to posting on the platform while still creating new monetization opportunities and maintaining the company’s reputation of helping its users. For further reading about Pinterest’s new creator fund, check out yesterday’s Market Talk here.   

Travel stocks are this week's biggest losers 

Seeing as most countries around the world are still in the midst of lockdowns, it might not come as much of a surprise that travel companies are struggling once again. As you can see from the above list, Tripadvisor and Ctrip were two of the biggest losers this week and this can be attributed to the fourth wave of coronavirus infections preventing people from traveling. 

However, we must remember that vaccines are being administered now at a very fast pace in many countries. In addition, the travel industry is expected to see a flood of business like nothing they have ever witnessed before as soon as border restrictions are lifted. This means that the long-term investor can pick up travel stocks now at a discount price before they shoot up again when vacations are booked post-pandemic. 

NicoleNicole

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