Webjet Limited (ASX: WEB) is the most shorted company on the ASX. At the time of writing, the Webjet share price is residing at $4.90.
A re-emergence of COVID-19 induced lockdowns has weighed on the online travel agent since mid-March. As a result, the short interest in Webjet has climbed atop the leader board.
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Blood in the water
Firstly, it is important to note that the short interest data is from 16 July 2021. This data is sourced by the Australian Securities & Investments Commission (ASIC) from individual short sellers, so there's a delay between collection and reporting.
Based on ASIC's latest data Webjet holds the highest amount of short interest, at 12.1% of shares on issue shorted. Interestingly, this isn't Webjet's first dance with short-sellers. Even at the beginning of the year, the online travel agent was the second most shorted ASX company with 12% short interest.
It seems the Webjet share price has become a popular bet for declining further. This is likely the result of how reliant the company is on a reopening of borders.
Additionally, because of the substantial decrease in revenue, Webjet has become a loss-making company. In its full-year results for FY21, Webjet revealed a net loss of $156.6 million. Therefore, the company is in a precarious position whereby it is burning through its cash to sustain operations.
Webjet share price presents 'golden opportunity'
Despite the high level of short interest, fund manager Roger Montgomery recently made a point of the opportunity in the Webjet share price.
According to Montgomery, the $346 million of capital raised in early 2020 fortified the business. The fund manager believes Webjet is well-positioned to capitalise once travel resumes. The only question is, when will that occur?
At the current Webjet share price, the company holds a market capitalisation of $1.86 billion.
