The Helloworld share price surged 19% in early August. Here's why it just lost ground

At the opening bell this morning, the Helloworld share price was up 19% so far in August. Today its share price fell sharply…

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The Helloworld Travel Ltd (ASX: HLO) share price gained an impressive 18.9% during the first 7 trading days of August. The travel service provider's performance was helped by yesterday's huge daily gain of 11.8%.

Today, Helloworld's share price retracted sharply, down by 4.23%.

That still sees Helloworld's shareholders with a 13.2% gain for the month of August, compared to a 3.0% gain in the All Ordinaries (INDEXASX: XAO).

But the company has a lot further to go before its share price regains is pre-COVID-19 levels. Travel shares were particularly hard hit by the social distancing measures, lockdowns, and state and national border closures put in place to contain the virus. And Helloworld was no exception.

Helloworld's share price plunged 83% from 21 February before finding a bottom on 23 March. Since then the share price has rebounded 161%. But that still leaves it down 63% for the 2020 calendar year.

Currently trading for $1.81 per share, Helloworld's market cap stands at $280.6 million.

What does Helloworld do?

Helloworld Travel, formerly Helloworld, is a travel service provider. The company sells international and domestic travel products and services in Australia, New Zealand, Asia and the South Pacific. Its 3 segments are retail, wholesale and travel management.

The retail segment acts as a franchisor of retail travel agency networks. These include Helloworld Branded Network, Helloworld Associate Network, Helloworld for Business and My Travel Group. The wholesale segment acquires air, cruise and land products which it sells through retail travel networks. Its travel management provides services to corporate and government customers. That includes booking customer flights and obtaining accommodations.

Why is the Helloworld share price tumbling today?

Last week and into the first 2 trading days of this week, investors were buoyed by increasing reports of a possible coronavirus vaccine and by slowly falling new infection numbers in hard hit Victoria.

Today, the news of new community transmissions of the virus in New Zealand resulted in fresh lockdown measures in Auckland. This likely led investors to believe that international travel, particularly the trans-Tasman bubble, are further off than hoped.

Combined with some likely profit taking after its gains of 19% in the first 7 days of August, the Helloworld share price closed down 4.2%.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Helloworld Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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