Please ensure Javascript is enabled for purposes of website accessibility

Why Pebblebrook Hotel Trust Stock Jumped as Much as 10% Today

By Reuben Gregg Brewer – Sep 14, 2020 at 2:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors were in a buying mood, but it wasn't really because anything changed about the hotel landlord.

What happened

Shares of hotel-focused real estate investment trust (REIT) Pebblebrook Hotel Trust (PEB -0.48%) were up as much as 10% at 1 p.m. EDT on Wall Street. Although the shares had pulled back a touch by 2:30 p.m., they were still holding on to a roughly 8% advance. It was a pretty good day for a stock that, even including that gain, is off by nearly 50% for 2020. The reason for the day's advance and the year-to-date tumble are one and the same -- COVID-19. 

So what

Over the weekend, AstraZeneca announced that it had resumed the phase three trials on its version of a COVID-19 vaccine. That news has investors excited about the prospects that a successful, safe, and widely available vaccine will help the world to move past the stifling economic impact of the pandemic. As a hotel owner, Pebblebrook has been heavily impacted by the economic shutdowns used to slow the spread of the coronavirus and, perhaps even worse, by the lingering fear people have of group settings and travel. (For reference, the second-quarter adjusted fund from operations loss was a painful $0.58 per share.) As such, it isn't unreasonable that good news on the COVID-19 front would lead investors to bid up Pebblebrook Hotel Trust's shares.  

A man in a suit talking on the phone in a hotel room.

Image source: Getty Images.

That said, investors need to take positive vaccine news with a grain of salt right now. Even after a vaccine is available, assuming that one is found, it will take time to inoculate broad swaths of the population. Thus, it will probably be awhile before businesses and consumers are ready to start traveling and staying at hotels again...unless they absolutely need to do so. In other words, a vaccine isn't likely to mean a quick return to normal for Pebblebrook Hotel Trust's business. 

Now what

Wall Street's mood can shift rapidly, and these days COVID-19 is a highly fluid and emotional subject. There's a lot of uncertainty here. Investors need to step back and consider the big picture when animal spirits are running strong. Indeed, the truth is that it probably wouldn't take much bad news on the pandemic front to get investors running in the opposite direction again. Pebblebrook Hotel Trust is not a stock for the faint of heart. 

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pebblebrook Hotel Trust Stock Quote
Pebblebrook Hotel Trust
$14.51 (-0.48%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.