Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Expedia shares sink after disappointing 2018 forecast

Stock Markets Feb 09, 2018 09:31AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The logo of global online travel brand Expedia is pictured at the International Tourism Trade Fair in Berlin
 
DJI
+0.61%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
EXPE
+0.25%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
TCOM
+0.83%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MS
+0.90%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BKNG
+1.69%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DJUSCG
+0.99%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Ankit Ajmera and Sanjana Shivdas

(Reuters) - Shares of U.S. online travel services company Expedia (O:EXPE) fell 16 percent in premarket trading on Friday, after forecasting 2018 selling and marketing costs would outpace revenue growth as it battles rivals for market share.

The company, which owns Expedia.com and Hotels.com, reported equally disappointing previous quarter results partly due to underperformance at its Trivago (O:TRVG) hotel-search website.

The latest quarter was the first full quarter under Expedia's new Chief Executive Officer Mark Okerstrom, who succeeded Dara Khosrowshahi after he left to take the top job at car-ride provider Uber Technologies Inc.

"Under the new management, Expedia is more aggressively investing in tech and marketing to scale its global footprint and catch up to industry leader Priceline Group Inc (O:PCLN), which currently has approximately 2x the inventory and room nights sold as Expedia," RBC Capital Markets analyst Mark Mahaney said.

Mahaney lowered his price target to $141 from $155, while maintaining an "outperform" rating.

Concerns that the apparent inventory war brewing between Priceline and Expedia after the management transition could weigh on the sector in a similar manner to what happened in China with online travel company Qunar, said Benchmark Co analyst Daniel Kurnos.

Profitability at Qunar and rival Ctrip (O:CTRP) were hurt a few years ago after a costly price war involving discount coupons to gain a bigger pie of the booming Chinese online travel sector.

"We don't envision a pleasant end to the apparent pricing war any time soon, noting that the Qunar situation took nearly 18 months to fully resolve itself," Kurnos said, downgrading the stock to "hold" from "buy" and suspending a price target for the stock.

Bellevue, Washington-based Expedia said on Thursday that investments in its core business and in vacation rental site HomeAway, which competes with Airbnb, as well as higher cloud spending will hurt the first quarter of 2018.

Yet some analysts were optimistic about the long term prospects of Expedia as investments including increased hiring at its lodging business would drive faster earnings before interest, taxes, depreciation and amortization and free cash flow growth in 2019.

"We acknowledge Expedia is now likely to be a show-me story until the second and the third quarter... but we remain "over weight" and are buyers of (the stock)," Morgan Stanley (NYSE:MS) analyst Brian Nowak said, lowering his price target to $150 from $160.

Up to Thursday's close of $123.03, Expedia's shares had risen about 0.2 percent in the past 12 months, underperforming a 13.6 percent increase in the Dow Jones U.S. Travel and Leisure index (DJUSCG).

Expedia shares sink after disappointing 2018 forecast
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email