Expedia, the popular online travel agency, made headlines this week with the announcement of a CEO change and better-than-expected earnings for the fourth quarter. However, the stock took a hit as it dropped below a key level after reaching a 52-week high.
Despite beating earnings estimates, Expedia’s fourth quarter bookings fell slightly below Wall Street’s expectations. Furthermore, the outlook for the first quarter suggests slower bookings growth, which led analysts to reconsider their position on the company. Bank of America analysts downgraded Expedia to neutral and lowered their price objective.
The CEO change at Expedia was also a notable development. Peter Kern, who has been serving as CEO since April 2020, will be succeeded by Ariane Gorin starting May 13. Gorin, who currently serves as President of Expedia Business Services, is expected to bring fresh insights and strategic vision to the company.
In terms of financial performance, analysts had projected fourth quarter earnings of $1.67 per share, a significant 33% increase year-over-year. Additionally, they anticipated a revenue climb of 9.7% to $2.873 billion. However, Expedia surpassed these expectations, reporting earnings of $1.72 per share (up 37% YoY) and a revenue increase of 10% to $2.887 billion.
Despite the positive earnings report, Expedia’s stock fell 17.6% below the 50-day moving average after reaching a high of 159.47. This decline mirrored a similar drop in Booking.com’s stock, which also fell after reaching a record high.
While Expedia’s stock had experienced significant gains over the past year, the company faced numerous challenges in 2022 due to travel headwinds caused by the ongoing COVID-19 pandemic. These headwinds likely impacted the Q4 bookings and the cautious outlook for the first quarter.
In conclusion, Expedia’s CEO change and better-than-expected earnings for Q4 drew attention this week. However, the stock’s drop below a key level and the cautious outlook for future bookings growth raised some concerns. Analysts reacted by downgrading the stock and lowering their price target. As Expedia navigates the challenges posed by the pandemic, the appointment of a new CEO may bring new strategies and initiatives to drive growth in the future.