Clear Secure Inc (NYSE: YOU) went public at the end of June. Road warriors in the US will know the firm from the biometric airport kiosks that they run in places like Orlando and Phoenix. While stock trading data is still sparse, it appears that the stock price has benefited impressively from investor attention.
One reason for the strong bounce may be the odd, aspirational narrative that the company’s CEO is spinning: “The potential for the company to move beyond travel to places like office buildings, restaurants and stadiums presents enormous opportunities,” asserts Caryn Seidman-Becker. The suggestion here, we think, is that Clear Secure is the vanguard of navigating future break-outs or epidemics. Their website asks the rhetorical question, “Ready to be unstoppable?”
We are not sure that a company that is heavily dependent on contracts and concessions demands the sort of premium that investors are willing to pay. Never mind the fact that Clear Secure operates in a business with a relatively low barrier-to-entry. Perhaps our fundamental instincts are getting in the way of more generous, one-for-the team “buy” analysis.
Clear Secure is an easy target, given its legacy problems as a privately-held firm, including strangely-limited nationwide functionality. But the IPO does spotlight a bigger issue with post-pandemic investing. Sentiment may outweigh fundamentals.
Investors in general are turbo-charged by the rapid of change in the US economy; they suffer from heightened fear-of-missing-out. And that fear is crystallizing into irrational thinking around travel-related companies, among others. Travel is, after all, everyman’s activity.
As a go-to idea, we like travel tech. It is a dynamic field of innovation. But our bias tilts toward firms that provide micro-level solutions, like hotel robotics or booking apps, rather than those looking to save-the-world from some unknown specter. The problem is that many of those venture gems are unable to digest the weight of institutional capital.
Once the US economy, among others, returns to equilibrium, high-flying, travel-tech ideas are likely to see a bumpy landing. Metaphorically, bright shiny kiosks are not a foundation for sustained stock prices. ■
Our Vantage Point: Investors are gripped by the fear-of-missing-out in the post-pandemic economy. Travel tech may be among those stories set to see a rapid shift in valuation.
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