Webjet (ASX: WEB) shares are currently suspended, is it the bargain of the century?
What is Webjet?
Webjet is a digital travel business spanning both global consumer markets (‘B2C’) and wholesale markets (‘B2B’). It was established in 1998 and now claims to be the leading online travel agency (OTA) in Australia and New Zealand. Webjet says it was the world’s first to use ‘Travel Services Aggregator’ technology and is now leading the industry in blockchain innovation.
Why are the Webjet shares suspended?
Webjet was the first sizeable business out of the gate to decide to try to raise capital. It went into a trading halt on 19 March 2020 and it’s currently working on a proposed capital raising.
The Webjet share price had fallen by over 70% before the trading halt and analysts are expecting that the capital raising will have to be done at an even cheaper price.
Webjet is a well respected business but the serious nature of how quickly things have turned has surprised governments and businesses alike. If a company suddenly loses all activity it’s going to run into trouble if it has debt on the balance sheet.
Is Webjet a bargain of the century?
It depends how long it takes for things to go back to normal. If the entire world is back to travelling like normal in six months then Webjet is extremely cheap. But even Australia’s government is saying this could be an issue for six months or more.
Even once the government gives the all-clear, it could take some time for people to have the confidence to book travel. It could be worth a small buy when possible, it’s a very good business, but there is a risk that COVID-19 is around longer than we think. Even better buys could be these top shares:
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Disclosure: At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.