Why Is Expedia Stock Up 24% This Year?

Expedia (NASDAQ: EXPE) stock remains up by about 24% year-to-date, in line with the S&P 500 which remains up by a similar 24% this year. In comparison, peer Tripadvisor (NASDAQ: TRIP) is down 36% year-to-date. So what are some of the trends that have driven Expedia stock higher of late?

Expedia Group is benefiting from resilient travel demand, driving growth and higher margins in its business-to-business (B2B) and business-to-consumer (B2C) segments. The company continues to invest in technology, customer loyalty, and its B2B platform, including the integration of artificial intelligence tools like ChatGPT. With an uplifted full-year guidance, management expects 5% gross bookings growth, driven by stronger lodging and air business trends. Expedia has also enhanced shareholder value through share repurchases and its “One Key” loyalty program, which is driving customer loyalty and repeat bookings. That said, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Expedia’s Q3 revenue reached $4.06 billion, reflecting a modest 3% year-over-year  (y-o-y) increase, hindered by a negative foreign exchange impact of 2%. Its total gross bookings reached $27.5 billion, up 7% y-o-y. It should be noted that B2B performance was particularly strong, with gross bookings up 19% y-o-y and revenue growing 18% y-o-y to $1.2 billion. This growth is attributed to robust corporate partnerships and heightened demand from business clients. In the B2C segment, gross bookings grew by 3%, spurred by platform improvements, but revenues fell marginally to $2.8 billion. Brand Expedia saw mid-teens growth in room nights. Lodging achieved gross bookings of $20 billion, up 8%, with hotel bookings climbing 10%. Financial highlights included a 61% increase in net income and 76% y-o-y growth in diluted EPS to $5.04. The company also announced a CFO transition, with Julie Whalen stepping down from her role and board position.

The performance of EXPE stock over the last 3-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 36% in 2021, -52% in 2022, and 73% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

We forecast Expedia’s revenues to be $13.6 billion for the fiscal year 2024, up 6% y-o-y. Given the changes to our revenues and earnings forecast, we have revised Expedia’s valuation to about $185 per share, based on $8.50 expected GAAP EPS and a 21.7x P/E multiple for the fiscal year 2024 – in line with the current market price (Dec 23).

It is helpful to see how its peers stack up. Expedia Peers shows how EXPE stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 12/23/2024
[2] Cumulative total returns since the end of 2016

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