Why Expedia (EXPE) Shares Are Plunging Today

Jabin Bastian /
2023/08/03 1:35 pm EDT

What Happened:

Shares of online travel agency Expedia (NASDAQ: EXPE) fell 11% in the morning session after the company reported second quarter results that narrowly missed analysts' revenue expectations. Gross bookings missed as well. On an absolute basis, revenue growth was muted. 

On the other hand, it was good to see Expedia grow Booked Room Nights. As for full year guidance, the company maintained the previous outlook of double-digit top line growth with margin expansion, which isn't too specific but does describe what Wall Street analysts expect. Overall, it was a mediocre quarter for Expedia, and with high expectations about the strength of travel, these results weren't enough.

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What is the market telling us:

Expedia's shares are quite volatile and over the last year have had 13 moves greater than 5%. But moves this big are very rare even for Expedia and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The previous big move was three months ago, when the stock gained 6.55% on the news that the company posted first quarter revenue, gross bookings and earnings per share that exceeded analysts' expectations. Operating profits missed. Despite this, it was still a positive quarter, with management highlighting "strong travel demand" in the first quarter and enhanced performance driven by "greater testing velocity and accelerating deployment of AI and ML, including our recent integration of ChatGPT."

Expedia is up 13.9% since the beginning of the year, but at $99.85 per share it is still trading 18.5% below its 52-week high of $122.53 from July 2023. Investors who bought $1,000 worth of Expedia's shares 5 years ago would now be looking at an investment worth $755.98.

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