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What happened
Shareholders of Expedia Group (NASDAQ: EXPE) managed positive returns thanks to a volatile market last year. The stock rose 22% in 2020 against a 16% increase S&P 500, according to data provided by S&P Global Market Intelligence.
Shares of the travel booking giant had fallen by more than 50% at one point in the year, but they recovered all that lost ground as investors began to look beyond the COVID-19 pandemic.
Image source: Getty Images.
So what
Expedia shares were among the hardest hit in the sale that hit Wall Street in March. The company’s focus on the travel industry has exposed it to a potentially massive drop in revenue during the pandemic. In fact, sales have fallen by more than 80% due to falling travel and vacation volumes. He was forced to take on more debt as cash flow turned sharply negative.
However, operating trends have improved steadily since April and Expedia reported encouraging rebounds in hotel and travel bookings in early November. Sales declines reached 58% in the third quarter of the year, compared to an 82% decline in the previous quarter.
Now what
Investors anticipating a rapid rebound should approach the stock with a great deal of caution. Air travel and vacation trends are unlikely to fully recover until the COVID-19 threat has passed. So while Expedia may show improved sales and profits over the next few quarters, it could be a year or more before it starts setting new operating records.
Still, some investors might prefer to own this tech specialist, or peers like TripAdvisor, on airline inventories, which are subject to much higher fixed costs.
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