Key Stats for EXPE Stock
- Past week performance: +5.9%
- 52-week range: $185 to $342
- Valuation model target price: $378
- Implied upside: 28.9% over 2.3 years
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Five Quarters of Beats, One Skeptical Analyst
Expedia Group (EXPE) climbed nearly 6% this week, extending a run that started with a strong Q2 report. The company beat Q2 estimates with adjusted earnings per share of $5.76 and revenue of $4.32 billion, its fifth consecutive quarter topping both the top and bottom lines. Management raised full-year guidance to $16.05 billion to $16.22 billion in revenue and $129.5 billion to $130.8 billion in gross bookings.
Growth was broad-based. Gross bookings rose 12% to $33.93 billion, and adjusted EBITDA jumped 23% to $1.11 billion, pushing margins to 25.9%. The standout was U.S. consumer demand, which posted its fastest growth in 15 quarters, while Expedia’s B2B segment, which powers travel bookings for other companies, notched its 20th straight quarter of double-digit growth. Europe remained a soft spot, since reduced air capacity and macro headwinds weighed on outbound travel.
Not everyone is convinced the rally has further to run. Morgan Stanley initiated coverage on the online travel sector this month and rated Expedia Underweight with a $235 price target, well below where the stock trades today. The bank framed AI as an opportunity rather than a threat for online travel agencies broadly, but it said it preferred peers with more unique inventory and stronger direct traffic.
CEO Ariane Gorin pushed back on that caution with the numbers themselves. “We exceeded the high end of both our top and bottom-line expectations for the fifth quarter in a row,” she said on the earnings call. If Expedia stock keeps climbing despite the Underweight rating, the market may be siding with execution over analyst skepticism, at least for now.
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A Discount That’s Getting Harder to Justify
Under valuation model assumptions realized through 12/31/28, the stock is modeled using:
- Revenue Growth (CAGR): 8.1%
- Operating Margins: 18.5%
- Exit P/E Multiple: 12.3x
Based on these inputs, the model estimates a $378 target price, implying a 28.9% total return from the current share price and an 11.7% annualized return over the next 2.3 years.
An 11.7% annualized return puts Expedia squarely in moderately attractive territory, and the case is straightforward. The stock trades cheap relative to both its own growth and its peer group. A 12.3x exit multiple is conservative for a business generating 23% EBITDA growth and expanding margins, so the model doesn’t require much optimism to reach its target.
Revenue growth of 8.1% reflects steady, not explosive, expansion, appropriate for a mature travel platform rather than a hypergrowth story. What stands out is the margin trajectory. Expedia’s adjusted EBITDA margin expanded nearly two points year over year, and management raised full-year margin-expansion guidance to 150 to 175 basis points, evidence that cost discipline is compounding alongside bookings growth.
Against its own trading history, Expedia’s current multiple sits well below where it traded before the pandemic reshaped travel demand. That gap between fundamental performance and valuation is exactly what Morgan Stanley’s bearish call is betting closes through price weakness rather than multiple expansion. The valuation model takes the opposite side of that bet.
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Expedia vs. Booking vs. Airbnb: Sizing Up the Travel Trade
Expedia’s valuation only makes sense next to its two biggest rivals, and the gap is significant. Booking Holdings (BKNG) trades around 18.5x to 18.9x forward earnings, with revenue growth near 15% and net margins above 20%, making it the largest and most profitable of the three online travel agencies. Airbnb (ABNB) trades richer still, near 29.6x forward earnings, with revenue growth closer to 12.6% and a business model built around alternative accommodations rather than traditional hotel and flight bookings.
Expedia trades at roughly 13.05x forward earnings, cheaper than both. That discount exists partly because Expedia’s brand portfolio has historically converted traffic less efficiently. The portfolio spans Expedia, Hotels.com, and Vrbo, compared with Booking.com’s direct-booking engine. Morgan Stanley’s bearish call leans on exactly that point about conversion efficiency. The firm argues Expedia has less unique inventory and weaker direct traffic than its peers.
But the growth numbers complicate that narrative. Expedia’s 14% revenue growth and 23% EBITDA growth this quarter matched or exceeded what Booking has posted in recent periods, even as Expedia trades at a meaningfully lower multiple. If that execution continues, the valuation gap between Expedia and Booking will look harder to justify with each passing quarter. Airbnb remains the wildcard of the group, growing steadily but trading at the richest multiple of the three, a premium that assumes its push beyond owner-operated lodging into hotels and additional services pays off.
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What’s Driving EXPE Stock Going Forward?
The B2B segment is the clearest structural catalyst. Expedia’s B2B gross bookings grew 21% in Q2, its 20th consecutive quarter of double-digit growth, as the company builds out what management calls a one-stop B2B travel shop. Continued investment there, including the recent Tiqets acquisition, weighs on near-term margins but expands Expedia’s total addressable market beyond direct consumer bookings.
AI integration across search and booking is the next watch item. Gorin noted organic search traffic has stayed stable to slightly up even as AI-driven search tools reshape how consumers discover travel options, a dynamic Morgan Stanley flagged as a potential opportunity for all three major OTAs if managed well.
Margin discipline will determine whether the raised guidance holds. Management has already signaled that margin expansion will moderate in Q3 as Expedia laps prior-year cost cuts and absorbs continued B2B investment and currency headwinds, before recovering in Q4.
European travel demand remains the biggest wildcard. Continued weakness there, driven by reduced air capacity and macro pressure, could offset strength in the U.S. if it doesn’t stabilize heading into 2027.
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Should You Invest in Expedia?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
