Expedia's Plunge: Are Shares Now A Discounted Travel Deal?

Expedia Group’s stock has taken a nosedive in early 2025, dropping from $172.89 on May 8 to $148.55 intraday on May 9—a 14% plunge in two days. The collapse followed a grim Q1 earnings report that revealed soft U.S. travel demand and a downward revision of full-year guidance. But is this a buying opportunity for investors, or a sign of deeper troubles in the travel sector? Let’s dive into the data.

The Earnings Miss: A Wake-Up Call for Travel Demand

Expedia’s Q1 results were a stark reminder that the post-pandemic travel boom isn’t indefinite. Gross bookings fell short of estimates, with the company citing “weaker-than-expected demand in the U.S. and select international markets.” The stock’s 7.3% after-hours drop on May 9 spoke volumes about investor sentiment.

The decline wasn’t isolated. Peers like Hilton and Airbnb also faced headwinds, with Hilton warning of a “more challenging environment for business travel” and Airbnb noting slowing B2C bookings. For Expedia, the pain is compounded by its reliance on consumer discretionary spending, which is sensitive to interest rates and economic uncertainty.

Analysts Split on the Outlook

The stock’s drop has triggered mixed reactions from analysts. Oppenheimer lowered its price target to $210 but maintained an “Outperform” rating, arguing that Expedia’s B2B revenue growth (a bright spot in Q1) and AI initiatives like Trip Matching (which turns social media inspiration into bookable trips) offer long-term potential. Meanwhile, Piper Sandler downgraded the stock to “Underweight,” citing concerns about B2C trends and pricing power.

The average analyst price target of $201.88 implies a 29% upside from May 9’s closing price of $156.66. But with a Wall Street consensus rating of 2.4 (out of 5), investors are clearly conflicted.

The B2B Silver Lining

While B2C demand faltered, Expedia’s B2B segment—a smaller but more stable revenue stream—grew by 15% year-over-year in Q1. The company also reported strong ad revenue growth, as hotels and airlines invested in its platform to attract travelers. This resilience in the business-to-business arena suggests Expedia’s core infrastructure remains robust, even if consumer-facing metrics are under pressure.

Macroeconomic Headwinds

Expedia’s struggles aren’t entirely self-inflicted. The U.S. travel sector is grappling with rising interest rates, which dampen consumer spending, and geopolitical uncertainty, such as U.S.-China trade tensions. A weaker dollar has also made international travel more expensive for Americans, hurting inbound demand—a key revenue driver for Expedia’s global brands like Hotels.com and Vrbo.

Is the Stock a Bargain Now?

At $156.66, Expedia’s shares are trading below GuruFocus’s estimated fair value of $164.69 for the next year. The stock’s price-to-sales ratio has compressed to 1.5x, near its five-year low. Meanwhile, the company’s net loss of $197 million in Q1 was partially offset by its B2B momentum and ad revenue gains.

But the risks remain. If U.S. travel demand doesn’t rebound—and there’s no guarantee it will—Expedia could face further downward revisions to its guidance. The stock’s volatility also reflects broader market anxiety: on May 9 alone, trading volume spiked to over 6 million shares, more than double the month’s average.

Conclusion: A Risky Gamble, But One Worth Considering

Expedia’s stock plunge creates a dilemma. On one hand, its valuation is now deeply discounted, and strategic moves like Trip Matching could unlock new revenue streams. GuruFocus’s fair value estimate and the average analyst target suggest the stock has room to rebound.

On the other hand, the company is navigating a fragile travel market with no clear catalyst for a demand rebound. Weak U.S. bookings and analyst downgrades are red flags.

The verdict? For investors with a long-term horizon and tolerance for volatility, Expedia’s current price might offer a compelling entry point—provided they’re willing to bet on a recovery in consumer travel spending. But with the stock down 25% from its 2023 highs, this is a call that requires patience.

In the end, Expedia’s plunge mirrors the broader travel sector’s challenges. Whether it’s a “discounted plane ticket” to future gains depends on whether the industry can weather the storm—or if this is just the beginning of a longer downturn.