Is Expedia Stock About to Hit $200.00? Maybe.
Expedia, Inc.’s (NASDAQ:EXPE) share price has been on a tear, up roughly seven percent at the end of October after the company posted solid third-quarter results and a strong outlook. The increase comes on the heels of two years of extraordinary growth. Since the beginning of 2012, Expedia’s stock price has soared 380%; this year alone shares of EXPE stock have climbed 60%.
Does Expedia, Inc. have what it takes to reach the $200.00 plateau in 2016? There are more than enough compelling reasons to believe Expedia’s stock price will continue its unprecedented rise over the coming years. Thus rewarding institutional investors who hold 90.5% of the company and chaffing those shorting EXPE stock.
This Could Be Huge for Expedia Stock
On October 29, the online travel company announced that third-quarter revenue increased 16% year-over-year to $1.93 billion. Net income for the period was up eight percent at $283.2 million, or $2.12 per share. (Source: “Expedia, Inc. Reports Third Quarter 2015 Results,” expediainc.com, October 29, 2015)
Room night growth accelerated 36% with domestic and international room nights growing 25%. Gross bookings were up 21%. Excluding the impact of foreign exchange, gross bookings increased 26% and revenue increased 27% year-over-year.
During the third quarter of 2015, the company added more than 14,000 properties to its global supply portfolio which now stands at around 271,000; a 29% increase over the third quarter of 2014.
On September 17, Expedia Inc. completed its acquisition of Orbitz Worldwide, Inc. for an enterprise value of approximately $1.6 billion. As a result, third-quarter numbers include 14 days of Orbitz financials.
That said; Expedia has been aggressively acquiring other online businesses to expand its global reach. In March 2013, Expedia completed the 61.6% stake in hotel search web site Trivago for approximately $564 million.
In November 2014, the company completed the acquisition of Wotif Group, an online travel site that caters to the Asia-Pacific region, for $612 million. And in January of this year, Expedia bought Travelocity for $280 million in cash. Collectively, these acquisitions helped bookings increase nine percent in the third quarter.
In addition to acquisitions, the company is also taking steps to attract more on-the-go consumers. The company launched an app exclusively for Samsung Galaxy phones and is working to get more Apple iOS and Alphabet Android users to connect on mobile devices.
The Hotels.com mobile booking app was recently recognized as the 2015 Travel Weekly Silver Magellan Award Winner in the Online Travel Services App category; having been downloaded more than 50 million times. Incredibly, one in three Hotels.com transactions are now made via mobile devices.
Is Expedia, Inc. a $200.00 Stock?
Could Expedia stock hit $200.00? Eventually, yes. And investors may not have to wait too long.
While Expedia Inc. is a global juggernaut in the online travel industry, there is a lot of room for growth. Over the last decade, Expedia’s international expansion strategy has helped its total international revenue grow from 21% to 45% of total revenue.
Here in North America, Expedia has a 48% stake of the U.S. and Canadian Online Travel Agency (OTA) markets. When it comes to other markets (Asia-Pacific, Latin America, Europe, the Middle East, and Africa), Expedia’s stake is just six percent.
Suffice it to say, there are tremendous opportunities for growth. Even from a technical perspective. Expedia’s stock price continues to have excellent momentum and is neither overbought nor oversold.
Chart courtesy of www.StockCharts.com
The spectacular run in Expedia stock since the markets bottomed in March 2009 is a result, in some respect, of the Federal Reserve’s easy monetary policies. And with an interest rate hike expected to put a brake on the bull market, chances are Expedia may not be able to replicate its incredible annual gains.
Or will it?
The company’s strong fundamentals, broad portfolio, aggressive acquisition strategy, and mobile development have it well positioned to continue its leading edge in the uber-competitive online travel industry. And with third-quarter results beating expectations and the company’s outlook bright, Expedia’s stock price could continue its current trajectory.
Bottom line, I’m still bullish on EXPE stock.