Expedia stock rebounds after 30% drop?

After a 30% drop since the beginning of the year (YTD), at the current price of around $130 per share, we believe Expedia Stock (NASDAQ: EXPE) could see a rebound. EXPE stock has fallen from $185 to $130 since the start of the year, underperforming broader indices, with the S&P falling 14% over the same period. The company’s shares are negatively affected by geopolitical tensions, inflation and slowing economic growth. Although Expedia beat analysts’ consensus estimates on the high and low in the last quarter of 2022, investors do not seem convinced that the company has fully recovered from the pandemic. First quarter total gross bookings were up 58% year-over-year (year-over-year) to $24.4 billion, but were still down 17% from the first quarter of 2019 Additionally, it continues to post an adjusted earnings loss per share at $0.47. in Q1. However, this is an improvement from the company’s loss of $2.02 per share in the year-ago quarter.

Expedia’s first-quarter revenue soared 81% year-on-year to $2.3 billion. The majority of Expedia’s revenue came from accommodation, which grew 78% year-over-year. In addition, the travel agency recorded significant growth in its advertising and media revenues, and its air travel-related sales increased by 50% compared to last year. Additionally, adjusted pre-tax operating losses were the same as three years ago, demonstrating Expedia’s ability to control costs even with lower revenues.

We updated our model after the Q1 release. We plan Expedia revenue to $11.9 billion for the whole of 2022, up 39% year-on-year. As for net income, we now expect EPS to come in at $7.32. In light of changes to our revenue and earnings guidance, we have revised our Expedia Rating at $144 per share, based on expected EPS of $7.32 and a P/E multiple of 19.7x for fiscal year 2022, nearly 10% above the current market price . We think the company’s shares look cheap at current levels.

We believe pent-up travel demand after nearly two years of deeply depressed travel volume will set the stage for 2022. Hotels were down 11% in January, but up 8% in February, 7% in March and 10% in April. In light of these trends, Expedia could see favorable booking growth in the second quarter. Still, this travel recovery may not be as robust as some investors had hoped. If inflationary pressure continues to persist in the longer term, broader markets are likely to see lower levels in the near term. And, a further drop in EXPE stock can be used as a buying opportunity for better long-term gains.

Here you will find our previous coverage of EXPE stock where you can follow our view over time.

Although EXPE stock looks set to generate more gains in the future, it’s worth seeing how its peers stack up. See how Expedia’s peers fare on important metrics. You can find other useful comparisons for companies in all industries on Peer Comparisons.

What if you were looking for a more balanced portfolio instead? Our quality portfolio and multi-strategy portfolio have consistently beaten the market since late 2016.

Return June 2022
MTD [1]
YTD [1]
Total [2]
Back EXPE 0% -28% 14%
S&P 500 return 1% -13% 86%
Trefis Multi-Strategy Portfolio 2% -18% 224%

[1] Monthly cumulative and annual cumulative as of 06/09/2022
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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