A finance guru has issued a chilling warning for investors looking to cash in their stocks post lockdown as borders begin to re-open across Australia and overseas.
Phil King, who is the co-founder of Regal Funds Management, also revealed what stocks he firmly believes should be avoided.
One well known company was firmly in his sights, the largest retailer of travel in Australia – Flight Centre.
Pointing to many people now booking their travel online rather than in-store and the slow business recovery post the pandemic, he is adamant shares in Flight Centre are set to plummet.
Despite a current level of close to $17.33, Mr King labelled the price a ‘short’, a common financial term for deceiving, The Australian reported.
Financial guru Phil King, the co-founder of Regal Funds Management, is adamant Flight Centre is a retail stock people should avoid post lockdown in Australia
Flight Centre has proven to be a popular stock for countless retail investors – but King believes that is set to change.
He predicted a bumpy road ahead for Flight Centre and potentially other travel companies, despite international borders now slowly opening up again.
He said Flight Centre it had relied on $800 million of convertible notes to stay afloat after closing countless stores due to Covid-19 in 2020.
Long term, it is forecast they will be converted into shares, and if share prices go down, Flight Centre will need to come up with the $800 million to avoid going under.
Another factor is many travellers are now opting to deal directly with airlines for their bookings abroad.
Finance guru Phil King also believes Flight Centre has failed to adapt to a digital world compared to many of their business rivals
‘The business (Flight Centre) was already facing a lot of difficulty before Covid-19,’ King said.
‘It has (also) been slower than many other travel agents in migrating to a digital world.’
Another stock King said investors should bypass is global video teleconferencing software program Zoom.
Initially a market favourite in 2020 as the world adjusted to working remotely in many sectors, its long term future is also said to be clouded financially.