Inspirato stock has plunged 90% over 30 days. Is the sell-off justified?

After securing massive gains shortly after coming public through a SPAC merger, shares of luxury travel firm Inspirato (ISPO) have plunged over the past 30 days, far more than those other travel services companies. But is the sell-off justified?

Since Feb. 17, shares of Inspirato, which went public mid-February, have tumbled 90%. In comparison, shares of Booking (BKNG) have fallen 18%, while Airbnb (ABNB) shares have slid 14%, Tripadvisor (TRIP) has dropped 13%, Trivago (TRVG) has declined 14% and Expedia (EXPE) has retreated 8%.

Travel services stocks have largely traded as a group over the past 30 days, moving downward to hit 30-day lows around March 7. The sector got caught up in a broader market sell-off triggered by the Ukraine crisis.

The stocks then rallied on March 16 along with the broader market amid news that the Federal Reserve was raising interest rates to help battle inflation.

Except for Inspirato, that is.

While its peers moved higher after the March 7 sell-off, Inspirato continued to move lower, missing the March 16 rally. Instead, the stock closed at $9.40 that day, its lowest finish as a public traded company. On March 18, the stock was headed for a new post-merger low, hitting $8.93 midday.

Inspirato offers a subscription service for affluent travelers that allows them to book trips through its platform, which includes high-end excursions and accommodations at luxury hotels and vacation homes. The company also provides property management services for participating luxury home owners.

While it has suffered a dramatic decline recently, Inspirato has fallen from a far higher perch than its peers. The company went public on Feb. 14 through a merger with SPAC Thayer Ventures, with shares closing at $11.12. The stock rallied heavily right after the merger, reaching a post-merger high of $108 on Feb. 17 before beginning its bumpy descent.

Despite the sell-off, analysts remain largely optimistic about the company, setting price targets more in-line with Inspirato’s first day performance.

On Thursday, Piper Sandler initiated coverage of the stock with an overweight rating and a price target of $12, citing the company’s unique business model.

Stifel also initiated coverage, but rated Inspirato a hold, with a price target of $10. Stifel said that although they found the company’s business model appealing it was concerned that Inspirato might not be able to find enough luxury vacation homes to meet demand.

For a more bearish take on the stock, check out SA contributor Edward Vranic’s “Inspirato: Warrant Price Suggests Impending Collapse of Stock”.

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