Wetherspoons Share Price
The Wetherspoons share price (LON:JDW) has moved sideways over the past few weeks. This is despite the continued success of the vaccine roll-out and the opening up of the UK economy. It is however possible that anticipated success has already been factored into the FTSE 250 company’s value.
At £13.83 the Wetherspoon share price is up by 23.9% since the turn of the year. Ahead of a potentially very busy summer, investors are now curious to know how much further it can go as the UK continues on its return to normality.
Expansion
Many hospitality and service sector business were forced to close down during the pandemic. This allowed JD Wetherspoon to expand its estate. As a result, the company may emerge from the pandemic in a stronger position.
The group recently disclosed plans for a £145m investment aimed at expanding and upgrading its pubs – providing there is not another lockdown. The FTSE 250 company has confirmed that the 75 projects would take over a year to complete and provide 2,000 new jobs. Over the coming decade the group is looking at investing an additional £750m, which would create a further 20,000 jobs.
The initial funding, set to begin this summer, will see 18 new pubs as well as 57 “significant” upgrades and extensions to existing sites.
JD Wetherspoons Business Model
Wetherspoons owns 8.8% of the pub market, more than any other company in the UK. It will be able to fall back on its tried and tested business model of cheap beer and economies of scale this summer.
This is backed up by the company’s performance during the year before the pandemic. In 2019 Wetherspoons made a pre-tax profit of £95m, and earned £1.8bn in revenue.
Therefore a bet on Wetherspoons doing well over the coming months and beyond could be viewed as a bet in favour of the UK economy, and more specifically the pub trade.
The prospect of further lockdowns remains a risk, while it is possible that a strong summer has been factored into the Wetherspoon share price. On the other hand, the company’s aggressive expansion plan during the pandemic may prove fruitful for the Wetherspoons share price over the long-term.
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