Expedia 4Q Sales Disappoint Due To COVID-19 Travel Impact; Shares Dip

Expedia’s revenues cratered 67% in the fourth quarter as the resurgence in coronavirus cases and pandemic-led restrictions curtailed travel demand. Shares dropped 2.1% in Friday’s pre-market trading session.

The online travel company’s sales plunged to $920 million year-on-year, falling short of consensus estimates of $1.1 billion. The revenue drop was fueled by a decline across all of the company’s offerings from lodging, air and advertising, to media revenues.

Expedia (EXPE) posted an adjusted loss per share of $2.64, which was wider than the loss per share of $1.98 expected by analysts.

Expedia CEO, Peter Kern said, “Last year was an incredibly difficult year for the travel industry, and while not as hard hit as many of our partners, Expedia was not spared the broadly negative impacts of COVID-19. The fourth quarter brought signs of hope in the form of vaccine approvals, but rising cases across the globe and rolling shutdowns of various travel markets made an impact.”

Kern added, “As a result, Q4 did not show any real sequential progress other than some signs of modest improvement around the holidays that carried into the early part of 2021.”

The company’s gross bookings in 4Q fell by 67% year-on-year to $7.6 billion. Gross bookings worsened in November due to a wave of new COVID-19 cases before improving slightly in December, the company reported. (See Expedia stock analysis on TipRanks)

Following the results, Stifel Nicolaus analyst Logan Thomas raised the stock’s price target from $117 to $140 and reiterated a Hold rating. Thomas said, “Lodging booking trends have incrementally improved QTD [quarter-to-date], reaching the high -40% range exiting January, supported by longer-window bookings on Vrbo and domestic activity.”

“Expedia remains focused on cost-initiatives while poised to re-enter acquisition channels as demand returns. Vrbo remains a performance highlight though there is still a long way to go for the traditional lodging segment,” the analyst added.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy rating. That’s based on 9 analysts suggesting a Buy and 6 analysts recommending a Hold. The average analyst price target of $150.07 implies that shares are fully priced at current levels.

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