Why Is Expedia (EXPE) Stock Down Today?

Expedia (NASDAQ:EXPE) is a big mover in today’s market. Currently, shares of EXPE stock are down more than 13% in early afternoon trading, in what’s been a rather green market today.

Expedia (EXPE) app logo on a smartphone screen
Source: NYC Russ / Shutterstock.com

This rebound in the market, ahead of the upcoming Federal Reserve decision on interest rate hikes, is intriguing. On the one hand, investors have reason to be nervous. There’s always the potential for a surprise, which could negatively impact the market. However, investors appear to be taking the view that much of the bearish news is already priced into stocks today, bidding up shares of most companies.

Up until now, Expedia has held its own, relative to the broader index of Nasdaq stocks. Much of this has to do with strong demand for travel. Anecdotal evidence showing strong demand moving forward — and little price sensitivity from consumers — provided a positive backdrop for EXPE stock heading into earnings. However, today’s drop appears to be a direct result of the company’s earnings results this morning.

Let’s dive into what the company reported.

EXPE Stock Sinks on Earnings Report

Earnings season tends to provide increased volatility in the markets. For traders, this can be a good thing. However, for those with large positions in a given stock, these short-term periods can cause gut-wrenching moves.

Such was the case with EXPE stock today. The company’s stock fell on revenue — which met expectations at $2.25 billion — and an adjusted earnings per share (EPS) loss of 47 cents per share. This loss came in one cent better than expected.

So, what gives? Expedia found a way to meet or exceed analyst expectations and investors still found a way to sell it off. To boot, the company noted its forward expectations for this summer’s travel season remain robust.

Well, investors appear to hold a shaky view of just how long this robust demand will proliferate. If the Federal Reserve is successful in tamping down demand, cyclical companies like Expedia may feel the brunt of the move. Additionally, the pandemic isn’t quite over and there’s always the lingering possibility that a new, more virulent variant could be on the horizon.

For now, Expedia is starting to look more attractive at these levels. Personally, it’s on my watch list. Today’s decline doesn’t seem to be warranted by its earnings results.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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