Flight Centre shares haven't traded this low since the pandemic, what's going on?

It's unlikely anyone would be surprised to learn the coronavirus pandemic had a devastating impact on the Flight Centre Travel Group Ltd (ASX: FLT) share price.

As implications resulting from travel restrictions imposed to halt the spread of the coronavirus became apparent to investors, the Flight Centre share price started to crash.

In late 2019 the Flight Centre share price was trading at around $40 per share.

By the end of March 2020, Flight Centre shares had nosedived and could be scooped up for around $8.90.

The Australian travel agency founded in 1982 had seen the value of its share price plunge by more than 75% in a few months.

Then things started to look like they were turning around for Flight Centre shareholders as the company's share price slowly began to climb back up to around $22 by the end of September 2024.

Those gains were short-lived.

Today, Flight Centre shares are changing hands for about $14.  

What happened?

The travel and tourism sector certainly hasn't been helped by the cost of living crisis.

Still, Flight Centre appears to be an outlier in a sector that has faced significant headwinds.

Its share price is down about 40% over the past year versus the sector average.

And its latest half-year results certainly did not provide investors with optimism.

The company posted a profit before tax of $ 88.2 million, down 27% from H1 FY 2024.

Burning cash

And the company has been burning through cash.

At the end of FY24 Flight Centre reported it was sitting on cash and cash equivalents totalling $1.138 billion.

Six months later, at the end of 2024, that figure was down by $420 million to $718 million.

As such, Flight Centre's share price started to head down again.

And it seems Flight Centre's half-year results continue to face scrutiny.

This month, the ASX asked Flight Centre to respond to a series of questions concerning its FY25 half-year results accounts.

In the letter addressed to Flight Centre Company Secretary David Smith, the ASX highlighted the change in Flight Centre's share price from $17.72 prior to the release of its results to a low of $15.07 following the release of the results.

The ASX drew attention to Listing Rule 3.1, which requires a listed company to immediately give the ASX any information concerning it that could reasonably be expected to have a material effect on its share price.

Flight Centre responded by stating that its reporting was in line with the rules.

Still, questions linger as investors head for the door.

The Flight Centre share price shed another 2.8% over the past week.

The post Flight Centre shares haven't traded this low since the pandemic, what's going on? appeared first on The Motley Fool Australia.

Motley Fool contributor Steve Holland 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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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