Investing
3 Stocks That Are Down on the EgyptAir Crash but Set to Recover
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The details of Thursday’s EgyptAir Flight 804 crash are just beginning to surface, and while no one is 100% certain what happened, reports suggest the downing of the plane is rooted in terrorism. The impact of 9/11 on U.S. airline stocks has grown to become an infamous, but textbook example of how terrorism affects the market — one that can be found in a host of business and economic textbooks today. Setting aside the ethical and emotional aspects of these events, however, there is an opportunity to gain exposure to a sentiment-driven oversell in a number of industries. Here are some companies that sold off in response to what happened on Thursday, and that likely will recover in due course.
Thomas Cook
Thomas Cook Group, which trades in London but has an over-the-counter American depositary receipt in the United States, kicked off Thursday’s session at just shy of $90 a share. By session close, the company had dipped to just $72 for a 20% drop. The company operates full-suite travel arrangements throughout Europe and North Africa, primarily out of the United Kingdom, and its sales rely heavily on consumer attitudes toward international travel. With the summer season by far its most active and only profitable period, a terrorist air attack in late May can be disastrous for sales. This probably won’t last, however.
The same thing happened when Malaysia Airlines flight 17 was shot down over Ukraine, and before that, during the 9/11 attacks. Sentiment caused a sell-off, but time corrected the oversell and the stock recovered after 30 or so days.
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