What Happened?
Shares of online travel agency Expedia (NASDAQ: EXPE) fell 7.7% in the afternoon session after the company reported disappointing first quarter 2025 results: while EPS and EBITDA significantly beat analysts' expectations, room nights booked slightly missed, causing revenue to also fall short of estimates. Revenue rose just 3% from a year ago, lagging growth in gross bookings. Overall, this quarter could have been better.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Expedia? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Expedia’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 17.9% on the news that the company reported strong fourth-quarter 2024 results that exceeded analysts' expectations across key metrics, including revenue, EPS, and EBITDA. Sales growth was driven by a 13% increase in total gross bookings as the company observed "better-than-expected travel demand."
Margins expanded, with adjusted EBITDA rising 21% and adjusted EBIT growing 50%, benefiting from sales growth and operational efficiency. While management didn't provide formal guidance, they signaled confidence in long-term growth by reinstating a $0.40 quarterly dividend.
Overall, we think this was a good quarter with some key areas of upside. Following the results, HSBC upgraded the stock from Hold to Buy, citing "Encouraging trends across leisure, B2B, advertising + int'l."
Expedia is down 16% since the beginning of the year, and at $155.77 per share, it is trading 24.6% below its 52-week high of $206.52 from February 2025. Investors who bought $1,000 worth of Expedia’s shares 5 years ago would now be looking at an investment worth $2,303.
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