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Impact of the COVID-19 Pandemic on the Travelling Industry: A Comparison of Performances of Three Representative Companies

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DOI: 10.23977/GEBM2020.014

Author(s)

Chuhan Zhang

Corresponding Author

Chuhan Zhang

ABSTRACT

In order to find out how severe the impact the Covid-19 pandemics was by looking more closely at the stock's market value, we did research on stocks guided by professor Mick Swartz from USC, picking three of the representative companies——TripAdvisor, American Express, and Choice Hotel International—— and comparing their stock by analyzing the performance of each company from which we draw conclusions. By combining the indices of three companies into three main categories, profitability, liquidity & solvency, and asset utilization, we compare average value of the fluctuation of the normal period with that of the epidemic period longitudinally to answer the question that whether the performance of the industry has decreased due to the prevalence of the virus. As a further application, the strategy used to analyze the behavior of different types of investor, including value investors, growth investors, and momentum investors, is also used as an inference during the pandemics. We found out that the stock price of TRIP has been much more stable than other two stocks since the outbreak of COVID-19, though also subject to somewhat decline. Second, the capital structure varies greatly among three companies, with TRIP holding lowest debt ratio of around 0.4. Consider that all businesses are strictly suffering from severe liquidity constraints during COVID-19 and many of them went bankruptcy for extremely high debt risk, lower debt ratio might help businesses be able to absorb some liquidity risk. Taking a closer look at the profitability, TRIP does perform better than other two companies, with a highest PE ratio of 34.13 and PEG ratio of 7.44. As a conclusion, TRIP indeed performs better so far in terms of resisting risk, however, it’s hard to say to which extent the COVID-19 would exert negative influence towards all tourism in the long run.

KEYWORDS

Covid-19, Traveling Industry, Stock Market

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