Expedia Stock Is Downgraded as Earnings Point to ‘Tough Slog’ for Travel
Updated May 09, 2025, 10:04 am EDT / Original May 09, 2025, 9:21 am EDT
Expedia -7.73% stock tumbled Friday as the company painted a bleak picture of travel demand within and into the U.S. in its first-quarter earnings.
The online travel agency’s shares plunged 7% to $156.69 in early trading after first-quarter revenue missed expectations in its results, disclosed late Thursday. Bookings and revenue grew 4% and 3% respectively—both results were at the lower end of the ranges it had forecast—as the company said it had faced “weaker-than-expected travel demand in the U.S. and into the U.S.”
Results for the current quarter are turning out to be worse. April was “somewhat softer than March,” CEO Ariane Gorin said on the company’s earnings call. Expedia cut its full-year guidance for bookings and revenue, saying it now expects growth in both metrics of between 2% and 4%, down from a previous range of 4% to 6%.
Piper Sandler analyst Thomas Champion downgraded the stock to Underweight from Neutral in a research note late Thursday. “The commentary around inbound travel and the B2C (business-to-consumer) business was discouraging and suggests a tough slog from here,” he said. “It could also get incrementally worse.”
He lowered his target for the stock price to $135 from $174.
Cruise operators and large U.S. carriers such as Delta Air Lines
DAL -0.74% and United Airlines UAL -2.19%
have found strength this earnings season, most notably as outbound international and premium travel have remained robust.
But Expedia is heavily exposed to domestic travel, with two-thirds of its business coming from those in the U.S.
“Expedia’s higher exposure to the U.S. is not ideal given the current backdrop,” J.P. Morgan analyst Doug Anmuth said in a note Friday. However, he added that the company’s current reduced forecasts for 2025 were better than “recession-driven” cuts to its own calls the bank made last month. Anmuth maintained a Neutral rating on the stock.
Expedia’s international presence did help its business-to-business unit to post 14% bookings growth. That, in turn, helped the number of total booked nights rise 6% in the first quarter, even though nights in the U.S. climbed by a percentage in the low single digits.
Of course, much of the consumer sentiment driving weaker travel demand stems from headlines around tariffs and trade. That has the potential to quickly change.
With that in mind, Wall Street isn’t entirely downbeat on the stock. Gordon Haskett analyst Robert Mollins has a Buy rating on the shares and a $200 price target. He said Expedia’s recent turnaround efforts meant it was well-positioned “to capture an eventual rebound in U.S. travel demand.”
Unless that rebound starts very soon, it’s going to be a tough summer for the industry.
Write to Callum Keown at callum.keown@dowjones.com
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