Expedia (NASDAQ:EXPE) stock plunged 15% after disappointing bookings numbers and the departure of CEO Peter Kern.
The travel site earned $132 million, 92 cents per share fully diluted, on revenue of $2.89 billion during the quarter. This compared with net income of $177 million, $1.11 per share, and revenue of $2.61 billion a year earlier.
However, the departure of Kern, who had been CEO for four years, spooked investors the most. Expedia was due to open this morning at about $134 per share, a market capitalization of under $19 billion on 2023 sales of $12.9 billion. Shares in rival Booking Holdings (NASDAQ:BKNG) have been roughly flat over the last 24 hours.
Kern Not the Concern
But there should be a concern here for investors.
That was Expedia’s miss on bookings, $21.7 billion instead of $22 billion expected. Fewer purchases of hotel rooms could mean the economy is weakening.
Kern’s letter to employees was a “mission accomplished” note. During his term, he consolidated the company’s tech operations, pruned brand names, and launched a new loyalty program. He expressed confidence in his successor, Ariane Gorin, and said he would remain on the board after leaving on May 1.
The bigger question remains those booking numbers. Western ski destinations admitted their Christmas wasn’t as merry as advertised. There have been anecdotes from AirBnB (NASDAQ:ABNB) hosts of slower business.
Analysts are looking for any signs of economic weakness that will prompt talk of a recession or faster rate cuts from the Federal Reserve.
EXPE Stock: What Happens Next?
Expedia will be fine. The fall in EXPE stock is likely temporary. Its price-to-earnings (PE) multiple of 29 was a little stretched anyway.
The bigger question is about consumer spending going forward. Did we all just go to Grandma’s house this Christmas, or are we really cutting back?
As of this writing, Dana Blankenhorn 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.
