Expedia Group stock surged in Friday trading after the company reported second-quarter earnings and sales that exceeded expectations. Investors focused on what analysts called "better-than-feared" Q2 results from Expedia and shrugged off a warning about slowing travel demand.
Seattle-based Expedia Group said late Thursday that it earned an adjusted $3.51 per share on sales of $3.56 billion for the June-ended quarter. That beat expectations from analysts of adjusted EPS of $3.18 per share and sales of $3.53 billion, according to FactSet.
Earnings increased 21.5% while sales grew 6%. Expedia Group includes travel websites Expedia, Hotels.com and Vrbo.
"We're pleased with our momentum and the sequential improvement in our consumer brands," Chief Executive Ariane Gorin said in a news release. "However, in July, we have seen a more challenging macro environment and a softening in travel demand. We are therefore adjusting our expectations for the rest of the year."
The company provided further detail on a conference call with analysts. Chief Financial Officer Julie Whalen said Expedia expects annual gross bookings growth at the "low end of our previously communicated range of mid- to high-single digits, at approximately 4%, and revenue growth to be two points higher at approximately 6%."
Further, the company sees revenue growth and gross bookings growth of 3% to 5% for the third quarter. Before Expedia's report, analysts polled by FactSet were projecting 6% sales growth to $4.2 billion.
On the stock market today, Expedia stock is up 7.5% at 126.89 in recent action.
Expedia Joins Airbnb, Booking Holdings With Demand Warning
Expedia is the latest travel firm to sound a warning about the market. Online travel rivals Booking Holdings and Airbnb reported results prior to Expedia. Booking shares fell after noting a moderation of demand in Europe. Airbnb stock tumbled after the company forecast lower-than-expected bookings, noting that U.S. demand was slowing. Expedia fell in tandem, as investors worried about a slowing travel market.
Wedbush analyst Scott Devitt said the results for other online travel agencies contributed to lower expectations for Expedia's report. Its overall numbers proved "better than feared," he told clients in a research note Friday.
"While Expedia is observing a similar slowdown in global travel demand, 2Q results were notably strong relative to peers and the company continues to make progress in longer-term oriented initiatives (app usage, retention rates, loyalty participation, etc.) that could support stronger growth in a more normalized environment," Devitt added. Wedbush has a neutral call on Expedia stock.
Growth for several parts of Expedia's businesses accelerated in the second quarter, Total gross bookings across Expedia's products grew 6% to $28.8 billion in Q2. That edged past estimates of $28.7 billion, according to FactSet. In Q1, bookings grew 3% year over year.
Hotel room nights booked grew 10% to 99 million, accelerating from 7% growth in Q1.
Expedia Stock Scuffling In 2024
Even with Friday's jump, Expedia shares have lost 16% this year, though they are up 15% over the past 12 months. Expedia stock sank following its first-quarter earnings report in April. The company reported lighter-than-expected bookings growth and lowered its forecast for the year.
Coming into the report, Expedia stock had an IBD Composite Rating of 54 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Expedia's IBD Relative Strength Rating was 31 out of 99. The RS Rating means that Expedia has outperformed just 30% of all stocks in IBD's database over the past year.
Before earnings, Expedia stock was trading within a consolidation pattern with a buy point of 160.05, according to MarketSurge charts.
