I've noticed there's two treads relating the FLT where one party says its headed for $15 and another $10. I'd like to take the hyperbole out of the discussion and give my 2 cents.
I think FLT is in for some choppy trading in the short term and may even hit $10, but I don't think so. Here's my reasoning why I think FLT will gradually lift.
1. Local travel within countries will begin to increase soon. Airlines are now flying more flights in many countries, AU and NZ are almost virus free with VIC (sorry on behalf of Victorians for our dud leader) the only state that doesn't have the virus licked. People need to get out. Business at FLT has gone from nonexistent a few months ago to "light" with recent reports saying people are starting to book local travel for late 2020 and 2021.
2. They have some $700 million in the bank. And while this is diminishing, they are cutting costs in a big way. As the cash burn decreases, this float becomes more valuable.
2.1 (Ive added this at a late stage and cant be bothered renumbering) . This point is very important, FLT has used the pandemic to cull 50% of its lesser performing stores. Under normal circumstances this wouldn't be easy, the media would be all over it as would the unions. But this "opportunity" has allowed FLT to ensure only its most profitable stores are functioning as travel bans are lifted. This is no small feat and should help shore up FLTs bottom line in the short, mid and long term.
3. Governments wont let this current state go on indefinitely, whether countries beat the virus by eradicating it or level it out through heard immunity it will peter out. My belief is countries like the US will just let it seep into the community while AU and NZ will attempt to eradicate the virus.
4. Sadly, the pandemic will mark the end for many small travel agencies. However FLT has the means to weather the storm and as such when the world does level out, it will be in a prime position.
5. Travelers will want to speak to a "real" person when booking their travel. Information will be key when booking travel in the new world. There will be right ways and wrong ways, safe places and less safe places. This puts FLT in a prime position.
6. While about 50 percent of FLTs income came from overseas, the other 50 was local. Local travel will begin sooner than international and will begin in AU before most other countries. This will also put FLT in a prime position compared to its international rivals. think about it, while the rest of the world is still grappling with the virus, FLT will be making money, yes it will be limited, but the name of the game isn't to trive but to survive the pandemic.
While I agree that the short term prospects for FLT are terrible with the huge cash burn and little prospects of a quick turn around, I believe in two years time today's prices will be very cheap. FLT is currently almost 40% of the June, post pandemic highs. And while the recent capital raising has diluted the shares compared to their post COVID prices, they currently represent a 273.488% discount from their January 2020 prices. Based on the recent radical turn-around for both WEB and FLT (yes I know it was followed by a dip), I'm confident that the up and coming turn around for FLT will be quick and massive.
PS in the interests of full disclosure I'm holding FLT at $11.90
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