DESP - Despegar's Stock Price Is Overly Optimistic

2024-02-01 01:07:37 ET

Summary

• Despegar achieved operational profitability with increased revenues and flat costs, resulting in a 40% stock appreciation.
• The stock requires significant optimism to generate an adequate yield.
• Despegar's growth rate of 13% for five years may not be sustainable, and the company is still exposed to economic cycles.

Despegar ( DESP ) is one of Latin America's leading OTAs, with a GBV market share of about 10%.

I wrote about the company in October 2022 and did not consider the stock an opportunity. The main reason was a lack of profitability during pre and post-pandemic periods. Without profitability, a company is much more risky....

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