Expedia (EXPE) had announced a change in leadership on Thursday, leading to a drop in stock prices on Friday despite exceeding earnings expectations for the fourth quarter. The president of Expedia for business, Ariane Gorin, will take over as the company’s new chief executive officer from Peter Kern starting May 13, as stated in a news release.
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Expedia’s Earnings Growth Surges
Estimates: Analysts had forecasted Expedia earnings to be at $1.67 per share, a 33% increase compared to the previous year. Revenue was anticipated to rise by 9.7% to $2.873 billion, according to FactSet. During the crucial holiday quarter, Wall Street expected bookings to grow by 7.2% to $21.997 billion.
Results: Earnings came in at $1.72 per share, marking a 37% increase and accelerating from the previous quarter’s gain of 33.6%. Revenue also grew by 10% to $2.887 billion, with gross bookings increasing by 6% to $21.672 billion.
Expedia Stock Breaks Out After Key Support
The stock of the online travel and booking site plummeted by 15% in premarket trading. However, it had risen by 3.3% to reach 159.47 in Thursday’s stock market trading, breaking through a 52-week high of 155.84 from a six-week flat base after attempting to do so on Wednesday, as per MarketSmith charts.
This breakout was part of a strong rebound from the 10-week moving average during this week.
However, investing right before earnings can be extremely risky. The 7%-deep flat base had formed following a significant surge from early November to late December.
Both Expedia and Booking.com (BKNG) are being closely monitored on the IBD Leaderboard watchlist.
On Thursday, Booking’s stock reached a record high with a 3.5% gain. The shares are on track for their sixth consecutive increase, bouncing back from the 10-week line.
Travel Rebounds After Slump
Expedia had experienced a 32% surge in the past year as travel demand started to rebound. However, it faced a downturn for most of 2022 due to various travel challenges, including the omicron coronavirus variant, the war in Ukraine, and rising inflation.
Nevertheless, the nature of Expedia’s stock performance seemed to have shifted positively, particularly following its Q3 earnings report on November 2. Since October, EXPE stock has had four weeks of gains in heavy volume and no down weeks in above-average turnover, according to Leaderboard analysis.
Up until February, Expedia’s stock had experienced a 7% increase, with several analysts raising their price targets ahead of its earnings report, as shown by FactSet.
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