By now, every person on the street is aware of the growing epidemic of Ebola. People have been on high alert ever since the first few cases of Ebola have sprouted in the United States and it has caused distress in travel stocks. With every new case found in the United States the decrease becomes more and more significant for the travel industry. Companies such as United Continental Holdings Inc., Delta Airlines, and Carnival are among the group which have encountered the most substantial drops in their stocks. I feel that these people who are selling their stocks out of irrational fear. The main concern here is that Ebola will cause a decrease in demand for travel companies which could eventually result in a serious capital loss. People may be overreacting due to a similar outbreak in 2002 when SARS erupted and restricted air travel; however Ebola and SARS are two very different sicknesses. Ebola is contracted through bodily fluids and is not airborne meaning it is harder to contract and safe to travel. Investors may be trying to cut their losses by selling their stocks; however the travel industry will inevitably bounce back in the near future because sicknesses are only temporary and regular volumes of travelling will certainly resume. With the Christmas travel season coming up so soon I think the investors are overreacting by selling their shares so soon without seeing the impact it will have on the upcoming holiday season.
Sources:
http://www.reuters.com/article/2014/10/15/us-usa-airlines-stocks-idUSKCN0I429U20141015