Travel is opening up. So, why is the Flight Centre (ASX:FLT) share price still the most shorted on the ASX?

Let's take a look at why Flight Centre's stock is so attractive to short sellers.

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The latest data this week on the ASX's most shorted shares shows that once again, Flight Centre Travel Group Ltd (ASX: FLT) is topping the list. The most recent data, released last Thursday, found 9.77% of Flight Centres shares are in short positions.

While the travel agency's top spot might have made sense at the height of the pandemic – when uncertainty surrounding the travel sector reigned free – it's less explainable now.

Nevertheless, short sellers have continued to back their favourite.

At Wednesday's close, the Flight Centre share price is $21.65, 4.7% lower than it was at the end of Tuesday's trade. The drop was seemingly driven by a trading update within the company's annual general meeting presentation.

Let's take a look at what may be causing Flight Centre to keep its crown as the market's most shorted stock.

Why are short sellers interested in Flight Centre?

That's the golden question, and one that's hard to answer.

As my Foolish colleague recently reported, it could be due to the travel agency's recovery from COVID-19, or lack thereof.

Flight Centre's market capitalisation is currently near where it was before COVID-19 practically shut down global travel. However, the Flight Centre share price is still 36% lower.

That's due to the company adding a huge number of new securities over the course of the pandemic.

Additionally, the company's earnings are still far below their pre-pandemic levels.

Over financial year 2019, Flight Centre brought in around $3 billion of revenue. It also reported a statutory net profit of approximately $264 million.

For comparison, over financial year 2021 the company's revenue was around $396 million and it posted a $433 million statutory loss after tax.

As The Motley Fool Australia has previously reported, this likely leads some to believe that the company's stock is overvalued.

Seemingly highlighting this, was Flight Centre's latest trading update, released yesterday.

For the month of September, Flight Centre's leisure travel sales were just 14% of what they were before the pandemic. The company's corporate travel leg performed significantly better. It reached 41% of pre-COVID sales.

For the business to be cash flow positive, those figures need to reach 40% and 50% respectively.

Though, Flight Centre's short sellers are at an ideological stalemate with the company's retail investors. The latter assumably believe the Flight Centre share price hasn't had its hay day yet.

What's next for Flight Centre?

As a result, many eyes will be on Flight Centre's short position when international travel returns to normal.

Sky News recently quoted the company's CEO, Graham Turner as saying travellers are still wary of promises of normality:

[T]here's a lot of deposits, a lot of bookings, but generally, people, I think, still need a little bit more certainty in certain areas.

Previously, Prime Minister Scott Morrison flagged that the nation's international borders should be open by Christmas.

Meanwhile, New South Wales will start allowing international travel in November, with no quarantine requirements for returning vaccinated travellers.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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