A guide to Trainline shares

It’s been two years since Trainline when public. Since then, Covid has struck. What does this mean for Trainline shares – especially now the UK lockdown is lifting?

A look at Trainline shares

Post-Trainline IPO: the state of play

Its’s been nearly two years since the Trainline IPO. With its initial public offering, the train-journey planning and ticketing app managed to raise £1.7bn. It was one of the hottest UK tech stocks at the time of going public.

In the following months up to February 2020, Trainline stock enjoyed significant share price growth, peaking in February at 547p per share. Just one month later, Trainline shares derailed. The price dropped to a low of 225p in March.

Since then, the story has been one of an upward chug, only for the stock to run out of steam and tank again. The price action has taken Trainline on a bit of a journey up to the current date. It rose again near IPO levels in December, before tanking once again in March 2021, falling from the 52-week high of 536p to 271p.

How are Trainline shares performing now?

At the time of writing, Trainline shares were trading at around 290p.

You may think that the stock price should be about to shoot up. The UK is gearing up to remove nearly all Covid-19 restrictions. That means more travel for both commuting and pleasure. 85% of the UK’s adult population has had their first vaccine.

In fact, Trainline revenues have already shot up year-on-year. £334m in ticket sales was racked up in Q1 – a 324% increase compared with Q1 2020. However, these are still around £150m lower than in Q1 2019.

International ticket sales reached £63m in the same period. Encouraging, but still someway short of the £117m generated in 2019’s first quarter.

Overall, UK ticket sales remain 70% of their pre-pandemic volume.

Trainline shares could still rise as lockdown lifts, but we’ll have to be careful. Competition is rising.

The UK’s long-awaited Williams-Shapps review of the railway sector launched its findings in May 2021. The report recommended the UK set up a government-backed body to oversee the railway sector.

The report states: “A new public body, Great British Railways, will run and plan the rail network, own the infrastructure, and receive the fare revenue. It will procure passenger services and set most fares and timetables. This will bring the whole system under single, national leadership with a new brand and identity, built upon the famous double arrow. This will mark the end of a quarter century of fragmentation.”

Even so, once the report landed, Trainline stock lost a collective £500m.

Consolidation is the driving force behind this government plan. Ask any frequent UK rail traveller and they’ll tell you booking can be a confusing process driven by a Byzantine approach to rail franchising. 20 companies operate UK railways – and there are 55m different fare and ticket combinations available.

Great British Railways is seeking to create a single platform on which all tickets and fares would be available. Given the enormity of this task, Trainline, which offers ticketing for 8 of the 20 separate rail franchise, may not be licked yet.

Where can the Trainline share price go from here?

Trainline is already engrained in the minds of UK consumers. It has millions of downloads, and for many is the go to ticketing service. It already fulfils a key part of Great British Railways targets, in that it brings together a number of franchises into one app.

It also goes beyond simply UK-based travel. As mentioned earlier, the Trainline app allows users to buy international tickets. Coach journeys can also be booked via Trainline. As such, it could continue to focus on and upgrade these parts of its service should Great British Railways emerge as a major threat.

There’s also the fact that the current UK government does not exactly have a great reputation when it comes to developing apps and software. The UK track & trace app designed to help combat Covid is notorious for being poorly conceived, built and implemented with costs spiralling into the tens of billions. There’s also no indication as to when this service will launch either.

As Trainline is already an easy-to-use app, its customers may choose to stick with it.

While the Trainline share price is relatively compared to its peak, it may be able to rise in line with full economic reopening of the UK.

However, there is the added snag of working from home. While the UK government is urging remote workers to start heading back into the office, many are more that content staying working from home. There may be a consistent drop in the number of commuters travelling by train every day.

In the short term, at least, the stock may experience the same price fluctuations we’ve seen since the Trainline IPO was released. It all depends on the UK’s post-lockdown landscape.

As ever, when picking stocks for your trading or investing portfolio, do your research before committing any capital towards Trainline stock. Only invest or trade if you are comfortable taking any losses.