EXPE - Expedia: Adapting To The 'New Normal' For Travel But Consumer Segment Remains Risky

2024-05-23 16:36:58 ET

Summary

• Expedia Group has struggled to recover from the lockdown shock, leaving the period with stagnant sales, higher marketing spending, and lower overall vacation travel.
• The company's competitive risks have increased with the rise of Airbnb and other online travel agencies that have continued to assume its market share.
• Expedia's B2C difficulties are offset by solid growth in B2B, which does not have the same competitive pressures as its traditional B2C business.
• Analysts anticipate Expedia's earnings will rise, giving it a forward "P/E" of around 6.4X based on its two-year expected earnings.
• While EXPE's valuation is discounted, economic risks and leverage may still pose an issue if travel demand reverses.

In November 2020, I wrote an in-depth short-opportunity article regarding Expedia Group ( EXPE ). At that time, I believed that it would struggle to recover from the COVID lockdown shock fully and would struggle with the associated debt and profit margin pressures. On top of that, the company's competitive risks appeared to be notable, with Airbnb ( ABNB ) going public around that time....

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