Insights

Why is the short interest in Flight Centre (ASX:FLT) shares still growing?

Is this why Flight Centre is the still ASX’s biggest short target?
The post Why is the short interest in Flight Centre (ASX:FLT) shares still growing? appeared first on The Motley Fool Australia. –

Flight Centre Travel Group Ltd (ASX: FLT) shares have continued to hold the title of the most shorted on the ASX this week.

In fact, the short interest in the travel stock has increased.

The most recent data from the Australian Securities and Investments Commission (ASIC) found a whopping 14.6% of Flight Centre shares are in the hands of short sellers.

But with travel bouncing back, why are shorters so bearish on the travel agent’s shares?

Let’s take a look at what might make the stock an attractive short buy.

Why are Flight Centre shares a short target?

 Flight Centre could be an attractive stock to short for several reasons.

Firstly, the uncertainty that the Omicron COVID-19 variant has brought might have led some to think the travel industry could take longer to recover than previously expected.

As The Motley Fool Australia reported last week, travel agents suffered in late November when the emergence of the mutation spurred the government to mandate quarantine for those travelling from 9 affected countries.

Flight Centre CEO Graham Turner reportedly said shutting borders every time a new variant emerged was unsustainable. However, the likelihood of future interruptions to travel seemingly remains rife.

The company’s financial position also might also draw in short sellers.

Regal Funds Management chief investing officer Philip King appeared at the Sohn Hearts & Minds conference early this month. There, he outlined why Flight Centre is his top short pick.

He pointed to capital raises undergone by the company during the pandemic that saw it offering $800 million worth of convertible notes.

That means, if the Flight Centre share price goes up, noteholders might convert their notes. However, doing so would dilute the company’s outstanding securities.

More challenges ahead?

Additionally, some experts are concerned about the company’s business model.

King, alongside Ord Minnett, is worried that it’s potentially less profitable than it used to be.

They believe it could face challenges as airlines encourage customers to book directly instead of paying incentives to travel agents.

Additionally, as Flight Centre closed more than half of its physical stores during the pandemic, King believes it might struggle to bring in revenue in the future.

However, not everyone is bearish on the Flight Centre share price.

Goldman Sachs has placed a $20.40 price target on the company’s stock – insinuating a potential 24% upside.

At the time of writing, Flight Centre shares are 1.5% lower trading at $16.44.

The post Why is the short interest in Flight Centre (ASX:FLT) shares still growing? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Flight Centre right now?

Before you consider Flight Centre, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Flight Centre wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

How high will ASX travel shares fly in 2022?

These are the 10 most shorted ASX shares

How is Omicron affecting the Flight Centre (ASX:FLT) share price and outlook?

Zip (ASX:Z1P) shares just topped these end-of-year rankings

Love ’em or hate ’em, Flight Centre (ASX:FLT) shares were the second most traded on Superhero this year. Here’s why

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!