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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Wetherspoons shares in the spotlight ahead of H1 results

JD Wetherspoons is set to publish its H1 results, covering the six months up to 31 January 2021. The nationwide pub chain’s figures are likely to be down compared to its last update, so why is the Wetherspoons share price bullish?

  • Wetherspoon share price up over 60% since September 2020 lows
  • Worst case scenario for 2021 is a £159 million pre-tax loss
  • Unlocking the economy and VAT tax cuts could be a boon for Wetherspoons shares
  • Looking to trade the Wetherspoons share price online? Open an account today

What will the JD Wetherspoons interim results reveal?

Early indications suggest that Wetherspoons’ latest half-year results will be significantly down compared to its most recent Q1 update in the quarter up to 8 November 2020. Sales fell by more than a quarter (27.6%) during this period, despite the UK tier system still being in operation.

Since the latest results release, government restrictions were tightened again in mid-November, with no respite for the hospitality industry over Christmas, prior to a third nationwide lockdown in January. All JD Wetherspoons (JDW.L) pubs have not yet served a single drink in 2021.

Despite this, the Wetherspoons share price has almost doubled in value from its low of 773.50p in September 2020, to 1380p this month. It’s returned to levels not seen since February 2020.

How will the financial picture improve for Wetherspoons in the coming months?

In January, JD Wetherspoons confirmed it had successfully raised £93.7m via an equity placing priced at 1120p. This will provide enough liquidity to enable the firm to survive until the end of March. It underlines the importance of its pubs being able to reopen to customers for outside service in April.

Within the company’s January update, it also revealed it was burning through over £4 million weekly whilst its pubs remain closed. Investors will be keen to discover whether this figure has risen further still in its interim results this week, which could place downward pressure on Wetherspoons shares.

99% of all Wetherspoons employees remain furloughed, and the extension of the furlough scheme until the end of September 2021 will be a welcome relief. Furthermore, the extension of value-added tax (VAT) tax cuts for the UK’s hospitality sector could also provide respite and maximise profits when the time comes to unlock.

Does the Wetherspoons share price hinge on a successful unlocking in Q2 2021?

Tim Martin, chairman of JD Wetherspoons, is conscious of the ‘number of false starts’ within the hospitality sector, having been hit hard by Covid-19 restrictions. However, Martin is hopeful of ‘more normal trading patterns in the spring and summer’ as a consequence of the UK’s ‘mass vaccination programme’.

With outdoor hospitality service slated to commence from 12 April, JD Wetherspoons has published a seven-point plan to reopen its 900+ pubs for the spring and summer seasons. The company will be encouraging customers to use its mobile app to place orders, while a first come first serve operation will remain in place for tables. Test and trace will also be in continuous operation, as it was when hospitality venues were open previously.

Reaching steps three and four of the UK government’s Covid-19 recovery roadmap will be vital to ensuring the long-term economic viability of the pub chain, while simultaneously preventing market volatility for Wetherspoons shares and the UK’s hospitality sector as a whole.

Will the bullish trend for Wetherspoons shares continue?

Take your position on UK shares for just a small initial deposit with spread bets or CFDs. Spread bets are completely tax-free, while CFDs are free from stamp duty.1 You can also buy and take ownership of UK shares for just £3 with us.2

Open an account to start trading or investing in UK shares.

1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
2 Deal three times or more in the previous month to qualify for our best rate.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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