Hospitality Stockwatch – June 2024
Authors
Arun Upneja, Ph.D. MBA, Dean, Boston University School of Hospitality Administration
Steve Kent, Ph.D., CFA, Assistant Professor, Molloy University-School of Business
The next few weeks will be pivotal for many of the over 120 stocks we analyze as part of the Hospitality Stockwatch. With nearly half of the year over, we are already starting to see some fraying around the edges as (1) American Airlines recently forecast cuts; (2) restaurant chains announced closures and bankruptcies (Boston Market and Red Lobster); and (3) at several upcoming investor conferences, management teams will have to affirm or lower guidance.
Another notable change is a shift away from emerging growth names, primarily SPACs. This trend can be attributed to the higher interest rates affecting the valuation of companies and the cost of capital. In addition, since many of these companies are cash-flow negative, the need for investment has resulted in dilutive capital raises.
The frustration with these shares led to the Goldman Sachs Portfolio strategy team to note in their May 2024 US Weekly Kickstart report, “The typical stock that analysts expect to become profitable this year or next year has fallen by 4% YTD. Firms expected to become profitable in 2026 have declined by 15%, and stocks forecast to turn profitable after 2026 have dropped by 28%. Unprofitable growth stock EV/Sales multiples have compressed from 14x in 2021 to 4x today, but this change appears appropriate in relationship to the shift in the interest rate environment.”
To illustrate how quickly sentiment and operating results have changed towards these early-stage growth companies, looking back at our inaugural Hospitality Stockwatch (February 2023), we included Cvent, F45 Training, Global Business Travel, Inspirato, Sonder, Selina, Vacasa, and Wheels Up. The only stocks among this group that still have a large enough market cap and stock price to continue to be included in our analysis are Global Business Travel, Inspirato, and Vacasa.
Click here to download Hospitality Stockwatch – Current as of June 5, 2024
Hospitality Stockwatch: Winners and Losers for May 2024
The decline we saw in April continued into May. Q2 stock performance was dismal for most of our coverage. Only the Assisted Living sector and the remaining SPACs we analyze in this report showed a positive gain. Assisted Living may be benefiting from stability and longer term growing demand, while many of our other sectors are facing near-term challenges. Car rentals bounced back slightly but is still the worst-performing subsector, down 43%.
