|Instrument:EXPEDIA GROUP INC|
Headquartered in Seattle, Washington, Expedia Group, Inc. is the world’s leading online travel agency by bookings and other associated metrics as of October 2021. The company provides travel products and services to both consumer and business clients through its wide portfolio of travel sites, including Expedia.com, Hotels.com, Vrbo, Travelocity, Wotif, Orbitz, and Egencia. With over 200 travel sites in total, it is fair to say that a journey starts with a visit to an Expedia website for many travellers. Expedia was founded in 1996 by Richard Barton, and it initially operated as a division of Microsoft. The name ‘Expedia’ was a fusion of the words ‘Exploration’ and ‘Speed’.
Microsoft spun off Expedia in 1999, and it became a public company during the frenzy tech boom period just before the turn of the millennium. After a successful IPO, Expedia became an active M&A player, acquiring Travescape.com and VacationSpot.com in 2000.
IAC then acquired Expedia itself in 2001. In 2005, IAC spun off Expedia, bundled together with other assets such as TripAdvisor, Hotels.com, Egencia, and Classic Vacations. Expedia divested TripAdvisor in 2011, a company that interestingly grew to become its competitor. Expedia pursued both organic and inorganic growth by expanding its product offering as well as making strategic acquisitions.
In its early years, Expedia operated a merchant-based model where it buys rooms and other bundled packages at discounted prices and then sells them to customers at a markup. But as it expanded into various markets internationally, the company also adopted the agency-based model, where it is given commissions for business that it brings to hotels and other related merchants.
Expedia Group, Inc. is listed on the Nasdaq, where it trades under the ticker symbol EXPE. The stock is categorised in the Consumer Cyclical sector, under the Travel Services industry.
Expedia Stock History
As with most companies during the pre-2000 tech boom, the Expedia stock was an instant hit. It floated at an IPO price of $14 and rallied to a close of over 280% on its first day of trading.
The subsequent tech bubble burst then weighed heavily on the EXPE stock, which dipped to below $5 by the end of 2000. The stock recovered in 2001 and staged a rally to above $70 by mid-2003. It then again tumbled sharply to lows of circa $10 by mid-2006, but there was no recovery this time as the 2008 Great Recession continued to pressure it lower to circa $5 by February 2009. Despite this, the post-recession stock market boom provided tailwinds for the EXPE stock, which embarked on a long-term rally that peaked above $150 by August 2017. A period of consolidation then followed, but the 2020 Great Lockdown, as a result of the coronavirus, particularly hit the travel industry hard, which triggered a plunge to lows of circa $50 in March 2020. The post-pandemic recovery was, however, very impressive and it pushed the EXPE stock to its all-time high of above $187 in March 2021 (as of Oct 2021).
Expedia has always been a willing dividend payer, but the cyclical nature of its business has always meant that it varies its payouts according to its performance in the market.
How to Trade Expedia Stock
Here are the factors to consider when trading EXPE stock:
- Legislative and Taxation Issues
Expedia has to deal with legal issues, such as contracts dealing with hotels and merchants, the privacy and security of clients, as well as data collection and security. The company has also had to deal with legal challenges in different jurisdictions where it is not clear whether it is booking agencies or hotels that should pay various taxes such as occupancy rates and other tourism charges.
Expedia operates a high-margin business, and while it is a leader in its industry, it faces tough competition from various players. Its biggest competitor, however, is Booking Holdings, which like Expedia, operates a number of popular travel sites such as Booking.com, Priceline.com, and Kayak.com. Beyond that, competition also comes from search engines, offline travel agencies, as well as travel supplier websites and call centres. Competition is based on pricing, product offering, and services, as well as loyalty programs.
- New Products/Services
Expedia operates in an industry where competition is fierce and always evolving. The company has only been around for 2 decades, but unlike other tech-based companies, its revenues give a tale of a company that has reached its maturity. To continue boosting its bottom line, it has to actively diversify away from its core travel agency focus. Granted, the acquisition of Trivago a few years ago has seen the company grow its metasearch revenues, but the company should also continue to boost its Media Solutions units so as to increase its advertising revenues.
- Period Earnings Reports
Expedia’s fiscal year runs from January to December, and the company releases quarterly and annual earnings reports to update investors on its business health and performance. Expedia investors typically focus on metrics such as revenue, gross bookings, and room nights. Upbeat numbers generally inspire higher stock prices, whereas downbeat numbers could weigh heavily on the price of EXPE stock.
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