Why Hersha Hospitality Stock Rose as Much as 20% on Aug. 6
Shares of hotel landlord Hersha Hospitality Trust (NYSE: HT) rose as much as 20% in early trading on Aug. 6. Although the real estate investment trust didn't hold on to all of those gains, by roughly 2:30 p.m. EDT it was still higher by a hefty 15% or so. The big driver of the advance was the company's earnings release, which came out after the close on Aug. 5. But the headline numbers were pretty awful. Why were investors this upbeat?
The story here revolves around COVID-19 and the government's effort to contain the illness by shutting down non-essential businesses and asking residents to, basically, stay home as much as possible. That's bad for hotels, and Hersha's second-quarter results bear that out. For example, revenue fell nearly 90% in the second quarter of 2020 compared to the same period in 2019. Adjusted funds from operations (AFFO), which is like earnings for an industrial company, came in at a loss of $0.62 per share compared to a profit of $0.77 per share in the prior year. That's brutal, but bad news was pretty much expected based on the economic/pandemic backdrop in the second quarter. Basically, investors had already written the quarter off.
Image source: Getty Images.
Source Fool.com
