Consumer Discretionary
Once a top post-Covid long idea, EXPE has ceded leadership to peers and the broader travel industry. Hedgeye believes the bull thesis - centred on margin expansion, mix shift and market share stability - has grown stale and is now reversing. Investors are 1) underestimating the magnitude of near term deceleration in the core B2C platform, 2) underestimating EXPE’s exposure to regional demand issues and incremental competition, 3) overestimating EXPE’s ability to leverage marketing and drive higher margins, and 4) significantly overestimating EXPE’s ability to maintain (or even grow) share of the total accommodation market in the coming years. While the stock screens as cheap, the risk/reward still skews negative, especially compared to Booking, their preferred long in Online Travel. Hedgeye's EXPE target price offers ~30% downside.
Edition: 215
- 11 July, 2025
Consumer Discretionary
EXPE has gone to great lengths to showcase its “industry-leading” B2B business, but this segment is only 30% of revenue and y/y growth just slipped below 20% for the first time since 2021, so it can only obfuscate weakness in the group’s core US lodging business for so long. Hesham Shaaban expects core declines to become more evident if his Revenge Travel Hangover theme manifests. He also plans to be short in force into the next print, especially given EXPE has a history of setting aspirational 4Q targets into year-end. It has missed 4Q revenue estimates twice in the past 3 years and the stock has also traded down on 4Q results each of the past 4 years.
Edition: 200
- 29 November, 2024
Communications
Gordon Haskett Research Advisors
Robert Mollins upgrades the stock to Buy - key factors behind his bullish stance include: 1) Investor uncertainty surrounding the tech stack migration is overblown. 2) EXPE will more than offset a slowdown in vacation rentals through its traditional lodging offerings. 3) The upcoming launch of “One Key” will drive share gains in the US in the near-term and internationally over coming years. 4) EXPE's valuation discount is overdone with the company expected to see fundamentals that are relatively in line with online travel peers. Robert’s $130 TP equates to 6.5x his 2024E adjusted EBITDA.
Edition: 161
- 26 May, 2023