Key Takeaways
- Expedia shares fell 12% today after it forecast fourth-quarter revenue growth of 4.0%-5.7%, down from 12% in the third quarter.
- Its fourth-quarter adjusted EBITDA outlook is roughly flat with a year ago.
- Marriott raised its full-year outlook this week, and Airbnb’s next report should show whether the slowdown is Expedia’s alone.
- JPMorgan calls the slowdown “transitory,” and the stock already traded below its five-year average forward P/E.
Expedia Group (EXPE) beat its own guidance and raised its full-year outlook after Wednesday’s close. The stock is down 12% today anyway.
Expedia expects fourth-quarter revenue of $3.69-$3.75 billion, growth of 4.0%-5.7%. That raises a question for Airbnb (ABNB), which competes with Expedia’s Vrbo, and for Marriott International (MAR), which supplies many of the rooms Expedia sells.
A strong quarter, then a slow one
Third-quarter revenue grew 12% to $4.94 billion, and the full-year outlook rose to $16.37-$16.43 billion. Before the report, analysts expected $16.2 billion this year and $17.4 billion in 2027, about 7% growth:
The new outlook beats this year’s estimate. But a fourth quarter growing 4.0%-5.7% is a slow lead-in to a 2027 that needs 7%. I’d expect that estimate to come down unless the slowdown fades quickly.
Profit looks weaker still: Expedia expects fourth-quarter adjusted EBITDA of $830-$880 million, against $848 million a year ago. On Wednesday’s call, finance chief Derek Andersen blamed the US midterms and unrest in Europe and the Middle East.
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Marriott isn’t seeing it yet
Marriott’s third quarter, reported Monday, shows no travel slump. RevPAR rose 6.5% worldwide and 4.4% internationally, and Marriott raised its full-year RevPAR outlook to 4.5%-5% growth. On the Middle East, CEO Anthony Capuano said “trends improved meaningfully from the second quarter.” If Expedia’s worries are right, Marriott’s fourth quarter should cool too.
Airbnb’s nights and seats booked grew 10% in the second quarter, faster than in the first. Expedia’s consumer bookings, Vrbo included, grew 7% in the third quarter. If Airbnb’s outlook holds up, the slowdown looks like Expedia’s own.
Cheaper than usual
JPMorgan cut its target to $315 from $330 and kept its Neutral rating, calling the growth slowdown “transitory.”
Expedia traded at 13x forward earnings at Wednesday’s close, just below its five-year average of 14x:
At today’s price, it’s even lower.
I think the selloff goes too far. Expedia looks like a buy if JPMorgan is right that this is one soft quarter. We’ll find out with Expedia’s fourth-quarter report early next year: if its 2027 outlook points back toward double-digit growth, “transitory” was the right word.
So what is Expedia stock actually worth?
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