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stock was down 2% at $125.39 in early morning trading on Friday after the travel site reported disappointing fiscal first-quarter revenue on Thursday.
The back story.
Expedia
stock (ticker: EXPE) is up 11% in 2019, but some analysts are uneasy because its short-term rental business, rebranded from HomeAway to Vrbo, is cooling. Vrbo’s gross bookings grew 5% in the first quarter, a sharp drop from 46% a year earlier.
What’s new.
Expedia
reported a loss of 27 cents a share, better than Wall Street’s estimated 38 cent loss. Revenue improved 4% year-over-year to $2.61 billion, but that was lower than the expected $2.69 billion. Expedia’s room nights increased 9%, slightly shy of the expected 9.4%.
In a conference call with analysts late Thursday, Expedia Group Chief Executive Mark Okerstrom acknowledged that the company’s short-term rental business of vacation homes and apartments faces search-engine-optimization headwinds as it consolidates some of its brands, and because of business model changes made over the past few years.
Looking ahead. Telsey Group analyst Brian McGill blames the “deceleration” of Expedia’s short-term rental business on “SEO headwinds” around its efforts to transition from the HomeAway brand to Vrbo. That business segment had quarterly gross bookings of $3.95 billion, which fell short of a $4.6 billion estimate. McGill maintains a Perform rating and price target of $125.
Stifel analyst Scott Devitt anticipates slower growth at Vrbo for “a number of quarters” as the reason for him lowering his price target to $135 from $140 while maintaining a Hold rating on Expedia shares.
Write to Jon Swartz at [email protected]