Why Expedia Shares Soared
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of travel deal specialist Expedia (NAS: EXPE) were gaining altitude today, up as much as 17%, after a promising earnings report last night.
So what: Strong hotel bookings led the charge as revenue grew 17%, to $1.2 billion. Hotels have become more valuable for these travel sites, as income from airfare bookings has slowed, and CEO Dara Khosorowshahi said that the hotel business was especially strong in the Asia-Pacific and European regions. Last month, Expedia expanded a deal with Chinese online travel service Elong, which Khosorwshahi said would give Expedia, which owns Hotwire and Hotels.com, a significant and lasting position in China. Adjusted earnings of $1.32 beat analyst estimates of 1.26 and were 8% above last year's figure of $1.22
Now what: The online travel business is notoriously volatile and competitive, as the stock charts of rivals like priceline.com and Travelzoo attest to. No company seems to have a true competitive advantage, but Expedia may have a leg up with its foothold in China, which should be a major growth engine for the industry going forward. The stock has jumped on earnings for three straight quarters, and still sells at a reasonable price. There's certainly some risk here, but also good reason for shares to move higher.
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The article Why Expedia Shares Soared originally appeared on Fool.com.Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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