10 Worst Cruise Stocks to Buy Now According to Short Sellers

3) Despegar.com, Corp. (NYSE:DESP)

Short % of Float (As of 15 August): 8.83%

Number of Hedge Fund Holders: 24

Despegar.com, Corp. (NYSE:DESP) is an online travel company in Latin America. Its product offering includes airline tickets, packages, and other travel-related products. It operates via 2 segments: Air, which consists of the sale of airline tickets, and Packages, Hotels, and Other Travel Products, which consist of travel packages, cruise tickets, and related products.

Short sellers believe that the company faces intense competition from local and global players, which is expected to limit its competitive advantages. Also, increased external and macroeconomic risks might hinder the company’s growth prospects. Short sellers opine that foreign exchange pressures might continue to impact its average selling prices, which can also weigh over its revenues. Moreover, in 1Q 2024, its gross bookings in the rest of Latin America saw a fall of 10% because of FX pressures.

If the currencies like Mexican Peso and the Brazilian Real continue to depreciate, it might make traveling abroad expensive for people of those countries. Also, Argentina (Despegar.com, Corp. (NYSE:DESP)’s third largest market) is in a recessionary environment, which might impact its revenues moving forward.

However, Wall Street analysts believe that the recent divestment of Destination Management Company (DMC), BRExperience, should help Despegar.com, Corp. (NYSE:DESP). Apart from improvement in operational efficiency and maximizing return on capital, this divestiture allows the company to better concentrate resources on its core business and further strengthen the organic growth profile. Moreover, its strategic focus on high-margin package sales and non-air revenues should help the company sail through a challenging environment.

Despegar.com, Corp. (NYSE:DESP) is expected to see expansion in its gross margin, mainly because of cost reductions and Al utilization. The analysts believe that 2H 2024 might generate stronger cash flow, with 4Q being the significant contributor.

Analysts at B. Riley upped their target price on the shares of Despegar.com, Corp. (NYSE:DESP) from $16.00 to $19.00. They gave a “Buy” rating on 17^th May 2024. The company was in the portfolios of 24 hedge funds at the end of 2Q 2024, up from 20 in the preceding quarter.