Online travel site Expedia (EXPE) has reported challenging first quarter earning results, with gross bookings collapsing 39% year-over-year to $17.9 billion.
Meanwhile Q1 Non-GAAP EPS of -$1.83 missed Street expectations by $0.46, while GAAP EPS of -$9.24 misses by $7.10. Although revenue plunged 15.7% year-over-year, it beat Street expectations by $60 million.
“Travel trends have been horrific” summed up RBC Capital analyst Mark Mahaney, noting that EBITDA turned negative for the first time… “that we can remember.” He is now modeling Bookings down 78% Y/Y in Q2, 53% in Q3, and 24% in Q4, writing “All in, Fundamental Trends were very negative. And will get worse in Q2.”
However the analyst did point out that EXPE referenced week/week Bookings improvements in April and May, although no quantification was provided. Mahaney has a $90 price target on EXPE (12% upside potential).
“Like all travel companies, Expedia Group suffered a major reduction in business since the onset of COVID-19. Fortunately, we were ahead of the game having implemented cost savings measures earlier this year,” said CEO Peter Kern. “We also raised significant additional capital, to further strengthen our liquidity position” he added.
For instance, Expedia secured $3.95 billion in additional funding, including $1.2 billion in preferred equity investments and $2.75 billion in 5-year unsecured senior notes. The company also suspended dividend payments and share repurchases, but did repurchase $370 million in Q1.
Shares in EXPE are currently rising 4% in Thursday’s pre-market trading, with the stock experiencing a 26% year-to-date decline. Overall analysts show a cautiously optimistic take on Expedia stock with a Moderate Buy consensus. The average analyst price target stands at $89. (See EXPE stock analysis on TipRanks).
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