If you define recession as the standard "two consecutive quarters of negative growth", you're right. If you define it on the per-capita model, we've been in recession for some time. Or you might want to use the one now preferred by economists, the Sahm model: "When the three-month moving average of the national unemployment rate is 0.5 percentage point or more above its low over the prior twelve months." (When you're having trouble sleeping, try saying that instead of counting sheep.)
My point is not about semantics and economics. Sure, the word "recession" is powerful but, on a practical level, is now as useful as defining politics by "left" and "right". Obsolete.
I don't doubt that WEB has been affected by the cost of living crisis, or the Olympics (as Guscic mentioned today), or the dozen other things that pundits are claiming as the reason for the share price dive. But I think there are other factors that didn't get a mention.
WEB's short-selling has been growing steadily and is now at the highest point for a year. Many shorters will have been burned as the share price went up steadily over the past year. I would think they'll want to close their positions before the split (if it happens) and are taking advantage of any share price drop, if they're not actually creating it.
Then there's the uncertainty about the pricing of the split companies. We've been told holders will get 1:1 shares in the spin-off. As it's been described by Guscic, those free shares are like a special dividend. Many will likely hold the WebBeds shares and sell the Webjet shares. But until the price of both is known, no one knows if they'll be better off, worse off, or about the same. That'd cause some jitters, especially in this climate.
Keep in mind the good news that was revealed by the figures. They may not be up to the rate of growth from the same time last year, but hey, they're all up, not down. I think@ChristopherC is right. Over-reaction. Hopefully, reversed soon as we get closer to the split.
WEB Price at posting:
$7.80 Sentiment: Hold Disclosure: Held
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