Expedia’s (EXPE), stock plunged to a low of $113.1, its lowest point since June 6th, and by over 27% from its highest point this year. The stock price crashed on Friday to $113.1, the lowest level since 6 June and more than 27% below its high point for this year. This means that Expedia has entered a bear market.
The Revenge Boom is Fading
Expedia has become a major player in the hospitality and travel industries. Expedia owns well-known brands such as Vrbo Travelocity Hotels.com and Expedia Cruises.
The platforms allow people to reserve their flights, hotels and vacation rentals. Booking Holdings is the dominant company in this highly competitive market. They own Priceline, Kayak and Booking.com.
There are fears that revenge travel is slowing down. As I mentioned in my stock forecast for Airbnb,. People who were in lockdowns during pandemics and accumulated savings began traveling when the lockdowns stopped.
This industry is now back to its new normal of slow, but steady growth. Booking Holdings’ numbers from last week, showing that revenue increased by 7% to $5.9billion in the third quarter, demonstrate this trend. The CEO of the company said in his statement that there was a slight moderation to the business, particularly in Europe. He stated:
From a regional standpoint, we noticed a moderate moderation in the growth of the travel market in Europe. We believe that we are still performing well in comparison to Europe’s market.
Earnings from Expedia ahead
Expedia is one of the biggest companies in travel. It was created by Microsoft in 1999 and spun-off in 2000. After a revenue low of $5.2 billion due to the pandemic in 2020, it has slowly recovered.
The data shows its revenue to be $8.59 Billion in 2021, followed by $11.6 Billion and $12.8Billion in 2022 and respectively. This means that the company has reached its pre-pandemic level, as its revenues were over $12 billion.
Expedia expects to earn $13.7 billion in revenue in each of the two next financial years, unless there is a major industry event.
Expedia’s earnings are due to be released on Thursday.
The company’s most recent figures show that gross bookings increased by 3% in the first three months of the year, to $30.22 billion. The company’s gross lodging bookings increased to $21.9 billion, while hotel bookings increased by 12%. The revenue jumped from $2.9 billion to $110 million while the loss on operations was also up.
Analysts anticipate that the results will show a 5.2% increase in revenue for the company in the second-quarter, while earnings per share increased from $2.89 in the previous quarter to $3.06. Expedia Group’s history shows that it has consistently beaten analysts’ expectations, so this could be a trend.
Expedia continues to reward shareholders. Expedia’s share purchases in the first three months totaled over $700m. This has resulted in a reduction of its shares outstanding from 150 million in 2012 to just 128 millions today.
Expedia’s stock is expected to rebound in the next few months, according to analysts. The company has a revenue growth of over 8,1%, whereas its EBITDA forward growth is at 10,7%. Its forward diluted earnings growth also stands at 73%. This is a strong number for a business that has been around for many years.
Expedia’s price-to earnings ratio is 11.30, and its forward PE ratio is 9.85. This means that Expedia is undervalued in comparison to the S&P 500, which has multiples of 20.
The majority of analysts who track the company give it a “buy” rating. Their average target price for the stock is $147, which is higher than its current value of $115. Seven analysts have given a sell recommendation, while 24 have the buy rating.
Stock price Analysis of Expedia
TradingView’s EXPE Chart
Daily chart showing the EXPE shares in strong downward trend since March of this year when they peaked at $160.20. The price has fallen to its lowest level since 6th June and is now below both the 100-day and 50-day Exponential moving averages (EMA).
Stock has fallen below an important support at $124.75, its high swing from February 2023. The stock also hovers near the Fibonacci Retracement of 23.6%.
Expedia’s share price is likely to continue dropping as buyers target the psychologically important $100. In the alternative, it could bounce back to retest resistance at $124.75. If it breaks above this level, we can expect more gains in the months to come.
The post Expedia Stock Forecast: Buy or Sell Before Earnings? This post may be updated as new information unfolds
