The Flight Centre Travel Group Ltd (ASX: FLT) share price is in the green today.
Again.
Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed Friday trading for $22.14. At the time of writing, shares are changing hands for $22.62, up 2.2%.
If the Flight Centre finishes the day in positive territory, as looks likely, this will mark the 11th consecutive trading day of gains for the stock. The last day shares ended the day lower was 7 July.
Which brings us to the legion of short sellers.
Are short sellers going to lose their shirts on this one?
Short sellers continue to bet that the Flight Centre share price is due for a fall.
Today marks the start of yet another week where the ASX 200 travel stock has the dubious honour of being the most shorted ASX share. While down slightly from last week, short interest remains at a whopping 10.3%.
With the Flight Centre share price up 22% in a month, are the short sellers right? Or are they going to lose their shirts on this one?
Well, time will tell.
But I certainly won’t be investing my hard-earned money betting against the momentum driving this company higher.
The analysts at Firetrail Investments highlighted some of the broader tailwinds at work here in their Firetrail Australian Small Companies Fund monthly report for June.
According to the analysts, “baby boomers with significant net cash balance sheets are enjoying extra income from higher interest rates”. They added that “essential workers in some fields are enjoying record pay increases”.
What does this imply for the Flight Centre share price outlook?
According to Firetrail:
Travel agent feedback in the last few weeks has highlighted an increase in the number of bookings valued over A$30,000. Many consumers are booking multiple A$10,000+ trips at the same time!
That’s something short-sellers may wish to consider.
Then there’s the sweetened earnings outlook the travel company announced last Thursday.
Flight Centre upgraded its FY 2023 underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) forecast to between $295 million and $305 million. Prior guidance for the 12 months ending 30 June was for EBITDA between $270 million and $290 million.
The ASX 200 travel stock also boosted investor sentiment – without appearing to dampen short seller interest – with its expectation of approximately $22 billion in total transaction value (TTV) for FY2023. That represents an increase of around 115% from FY 2022.
Offering further potential support to the Flight Centre share price would be any major capitulation by the short sellers.
With 10.3% of the stock held short, a sizeable wave of short covering could put the squeeze on any holdouts, as traders closing out their short positions will need to buy Flight Centre shares.
Flight Centre share price snapshot
The Flight Centre share price has been a stellar performer so far in 2023, up 57% since the opening bell on 3 January.
