What Happened?

Shares of online travel agency Expedia (NASDAQ:EXPE) jumped 7.7% in the morning session after the Financial Times reported Uber is mulling an acquisition of the company. According to the sources, the talks are still in the early stages, and it is possible that a deal will not be reached.

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What The Market Is Telling Us

Expedia’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 8 months ago when the stock dropped 20.3% on the news that the company reported fourth-quarter results showing revenue growth stalled as its gross bookings came in lower than expected due to a reduction in average air ticket prices and pressures from the Middle East crisis.

On the other hand, Expedia beat analysts' adjusted EBITDA expectations. However, Expedia's demand outlook wasn't so encouraging. While it expects travel demand to remain relatively healthy, growth rates across the world are expected to decelerate.

Looking ahead, the company expects gross bookings in Q1 to be in the low single digits, with revenue growth in the mid-single digits. The management added that it continued to see "continued pressure in air business due to reduced pricing levels from increased capacity and the grounding of the Boeing fleet, as well as some pressure in our Vrbo brand."

To lead the company moving ahead, Expedia announced the appointment of Ariane Gorin as CEO, effective May 13, 2024, succeeding Peter Kern, who will transition to the role of Vice Chairman and continue as a member of the Board of Directors, ensuring a smooth transition. Ariane Gorin has been at Expedia since 2013, where she has served as President of Expedia for Business. Overall, this was a mediocre quarter for Expedia, and the market was likely looking for more bookings.

Expedia is up 6.5% since the beginning of the year, and at $158.41 per share, it is trading close to its 52-week high of $159.47 from February 2024. Investors who bought $1,000 worth of Expedia’s shares 5 years ago would now be looking at an investment worth $1,144.

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