Expedia’s Share Price Drop


CEO’s excitement came unappreciated by investors

This week, Expedia announced its fourth quarter and 2017 results.

“I am excited to report that Expedia began 2018 firmly on a path toward faster growth and greater share gains in the $1.6 trillion travel industry. Over the past several months, we have made key organizational changes, aligned our company around common objectives and began executing on a new direction aimed at accelerating the geographic expansion of our global travel platform.

“We are now operating with a clear focus on our highest priority markets, making concentrated investments across the platform including a step function change in our pace of adding new properties to our marketplace. These efforts combined with the impact of our ongoing cloud migration result in expectations for full year 2018 Adjusted EBITDA growth of 6% to 11%*.

CEO Mark Okerstrom

In return, Expedia’s shares tumbled 15.5%.

Expedia does not only operate its business through its eponymous website but also through other sites such as Hotels.com, Orbitz.com, Expedia Affiliate Network, Hotwire.com, Travelocity, Wotif Group, CarRentals.com and Classic Vacations. Orbitz included the United States travel Websites, Orbitz.com and CheapTickets.com, as well as e-bookers, a travel brand with Websites in seven European countries (Reuters).

In 2017, Expedia reported 14.7% rise in revenue and 42% profit increase compared to 2016. The company also carried 34% more debt to $4.25 billion (0.94x debt-equity), and a book value of $4.5 billion.

In the past three fiscal years, Expedia raised $761 million in financing activities and generated an accumulated $2.4 billion.

Analysts have an average price target of $138.07/share (vs. $104.59 at the time of writing). Conservative valuation indicated a per share figure of $115.54.

Disclosure: no shares in Expedia.

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